By Maria Martinez
The German ifo Institute expects the German economy to begin recovering gradually from the downturn caused by the coronavirus crisis, according to ifo's summer forecasts.
After economic output contracted 2.2% in the first quarter and is forecast to have declined 11.9% in 2Q, ifo forecasts growth of 6.9% in 3Q and 3.8% in 4Q.
"Things will gradually start to pick up again now," said Timo Wollmershaeuser, head of forecasts at ifo.
However, this is based on assumptions about the further course of the pandemic and the political responses to it, which come with a high degree of uncertainty, ifo said.
"The strong growth expected in the second half of the year can be explained as a result of the low goods production and service levels during the economic shutdown," Mr. Wollmershaeuser said.
Ifo projects German economic output will shrink 6.7% this year compared with 2019. For next year, the ifo Institute expects growth of 6.4%, meaning that the level of economic output achieved at the end of 2021 will be back on par with the end of 2019, it said.
The average number of unemployed people is estimated to increase from 2.3 million to 2.7 million in 2020. In 2021, by contrast, it will fall to 2.6 million, ifo forecasts. This will take the unemployment rate up from 5.0% to 5.9% this year, before it falls again to 5.6% in 2021.
According to ifo's calculations, the number of short-time workers fell to 6.7 million in June, down from 7.3 million in May. The average number of employees will fall from 45.2 million to 44.8 million this year and will rise again slightly to 44.9 million next year, ifo said.
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(END) Dow Jones Newswires
July 01, 2020 04:39 ET (08:39 GMT)
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