MNI BRIEF: German Lockdown Leads To Stagnation in Q1: Ifo

German economic growth is seen flat in Q1due to the lockdown extension until mid-February, the Ifo Institute said Wednesday. The Munich-based institute sees growth picking up by 3% in Q2. "Every week the lockdown Is extended leads to direct losses of revenue, production and value creation," Ifo Head of Forecasts Timo Wollmershäuser SAID.

Service sector growth, directly affected by the lockdown, is likely to decline at a similar extent as in the spring of 2020. On the other hand, the situation for the manufacturing sector is different as the lockdown does not seem to have the same impact as last year. Economic output is likely to increase in the industrial sector in Q1, according to the Ifo institute.

The effect of the lockdown on public services, education and health, which accounts for 19% of economic output, is uncertain. "It fell more than 8% in Q2 2020, partly because daycare facilities were completely closed which led to the loss of hours worked in this sector," Wollmershäuser added. It is possible that the situation is different this year as the capacity of childcare is relatively high at 50%, it was noted.