ifo Economic Forecast Winter 2020: The Coronavirus Strikes Back – Another Lockdown Slows the Economy for a Second Time

The German economy recovered surprisingly quickly in the third quarter from the lockdown in the spring. In the fall, however, infections began to spread much more quickly again, with the result that another lockdown was imposed in November. However, the immediate economic impact is likely to be less this time than in the spring, as the government’s infection control measures have so far focused mainly on providers of services involving intensive social contact. Nevertheless, the economic recovery is likely to have come to a halt for the time being and gross domestic product is likely to shrink again in the final quarter. Overall, economic output is expected to slump by 5.1 percent in 2020. For the rest of the forecast period, it is assumed that the infection control measures in place since November will remain in force unchanged until March 2021 and then be gradually relaxed. Against this background, price-adjusted GDP is expected to grow by 4.2 percent in 2021.