Second Wave of Coronavirus Leads to Weekly Losses of EUR 1.5 Billion in Germany

The second wave of coronavirus will act as a brake on the German economy in the 2020/2021 winter half-year, reducing value added by EUR 1.5 billion each week. This is the result from an analysis of ifo Business Surveys. “This means the macroeconomic impact will be significantly lower than during the first wave in spring 2020,” says Timo Wollmershäuser, Head of Forecasts at ifo. “Economic output is likely to slip into negative territory only in consumer-related service sectors, where social contact is an important part of the business model.”

These include hospitality, cultural facilities, sports and leisure facilities, as well as hairdressing and beauty treatment. They drag down the rate of change in GDP by around half a percentage point in the fourth quarter of 2020 and by just under another percentage point in the first quarter of 2021. Overall, real economic output in the affected sectors is likely to be around EUR 20 billion lower in the first quarter of 2021 than in the fourth quarter of 2019, the last pre-crisis quarter. “However,” Wollmershäuser adds, “given that the manufacturing and construction sectors continue to perform well, GDP is likely to stagnate rather than decline at the beginning of the year.”