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MNI BRIEF: Leading Economists Revise Germany Outlook Lower

MNI (London)
LONDON (MNI)

The joint economic forecast from Germany's leading economic institutes sees German GDP 1pp lower at 3.7% in 2021 and at 3.9% in 2022, as the current lockdown delays the recovery. Growth in Q1 is expected to decline by 1.8%, Torsten Schmidt, Chief Economist at RWI said. "The economy is likely to return to normal output levels around the start of the coming year," the report stated.

Forecast assumptions by the Ifo, DIW, IfW, IWH and RWI are based on no easing of restrictions before the middle of Q2 with some restrictions still in place until the end of Q3. "We expect a vigorous expansion of economic activities as the measures are gradually lifted over the course of the six months through the summer, especially in the services sector that was particularly affected by the pandemic," Schmidt added.

Besides the downside risks to growth regarding the development of the pandemic, "Germany is facing a far-reaching demographic transition in the years ahead," the report concluded. "The projections indicate that the rate of growth potential is expected to decline by around one percentage point by 2030."

Source: Ifo Institute - Joint Economic Forecast Project Group

MNI London Bureau | +44 203-865-3814 | irene.prihoda@marketnews.com
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