Summary: Joint Economic Forecast Spring 2020: Economy in Shock – Fiscal Policy to Counteract

Germany’s economy is slumping dramatically as a result of the coronavirus pandemic. To slow down the wave of infection, the government has severely restricted economic activity in Germany. Consequently, GDP will shrink this year by 4.2 percent. The recession is leaving very clear marks on the labor market and the government budget. At its peak, the unemployment rate will jump to 5.9 percent and the number of short-time workers to 2.4 million. After the shutdown, the economy will gradually recover. Accordingly, the increase in gross domestic product next year will be strong at 5.8%.