++ 6.3 minus gross domestic product (GDP) ++ 7.4 minus in consumption ++ 11.6 percent drop in exports ++ 3 million Germans in short-time work ++ The global economy is slumping like never before ++ 2022 only at the level of 2019 again ++
Shock numbers for the German economy! Federal Minister of Economics Peter Altmaier (61, CDU) presented the government’s spring projection for 2020 on Wednesday afternoon: Corona threatens Germany with “the worst recession in the history of the Federal Republic”.
According to the government, the gross domestic product (GDP) will decrease by 6.3 percent this year. In addition, “the performance from before the crisis” can only be achieved in the year after next. The expected growth in 2021 (plus 5.2 percent) could not compensate for the corona crash.
This would be a stronger economic slump than in the global financial crisis more than ten years ago. It is forecast that the level from before the Corona crisis will not be reached until 2022. In 2021, the economy would slowly grow again (5.2 percent) before “the pre-crisis performance” was achieved the following year.
More shock numbers
Altmaier emphasized that Germany was exposed to a “massive” domestic and foreign shock.
► The global economy as a whole is in a “movement towards a deep recession,” said Altmaier. The expected decline of three percent would have “repercussions on the German economy”. Global demand for German goods will decline.
The result: an export decline of 11.6 percent!
► Because of the closures, private consumption is also falling. Altmaier: “We expect a decline of around 7.4 percent in 2020.”
► Investments in fixed assets will also “fall this year” – probably by five percent.
In addition, the crisis has ramifications for German citizens: We will “have fewer on the job market for the first time in many years,” said the CDU politician. It is a decline “that hurts”. And yet it is only a “fraction” of what other countries, especially the United States, are experiencing.
The federal government would have alleviated an “increase in unemployment” by “massive use of short-time work”. Nevertheless, “at least three million people would be on short-time work” in March and April.
“It is a long-distance run”
Already at the beginning of the press conference, Altmaier explained that there are “nicer occasions” to go public. “But it’s a long-distance run”. “A roadmap” is now needed for how social and economic life can be started up again.
If the infection numbers in Germany allow it, he hopes to be able to “give a perspective of hope for an economic restart in Germany” soon. In May and June at the latest, economic life should now be “gradually resumed”.
The Federal Republic would presumably have reached the economic low “at the end of the second quarter”. The government is expecting “a path of recovery” from the third quarter.
That is why spring projection is so important
The spring projection is also important because its basic parameters form the basis for the tax estimate in May. Because of the Corona crisis, less tax revenue is expected. Finance Minister Olaf Scholz (SPD) is already planning new debts of 156 billion euros in the fight against the crisis.
Many sectors are severely affected by the massive restrictions in the fight against the virus – such as the aviation and travel industries, hotels and restaurants, but also the trades and industry. Orders and sales have broken down.
The federal government had launched extensive aid programs to protect jobs and companies and made it clear that they could reload if necessary.
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