The German economy will shrink less this year than initially expected, thanks to a surprisingly strong recovery over the summer, but the second wave of the COVID-19 pandemic poses a risk for next year’s return, he said Wednesday. The Council of Wise Men – the five economists who advise the Berlin government, reports Reuters, according to Agerpres.
“We have not yet overcome the coronavirus crisis,” said Wise Council President Lars Feld, adding that the economic recovery remains fragile due to the rapid increase in infections. “Future developments depend on how the pandemic will be kept under control and how other foreign economies evolve,” Feld said, referring to Germany’s high reliance on exports.
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Currently, the five economists advising the Berlin government predict that Germany’s GDP will contract 5.1% this year, while in June they were betting on a 6.5% decline. According to the new data, the damage caused to the German pandemic economy could be less than the shock suffered by the global financial crisis of 2009, when the German economy contracted by 5.6%.
For 2021, on the other hand, the Council of the Three Kings has revised its estimates on the evolution of the German economy downwards, bringing them forward by 3.7%, compared to previous estimates which predicted a progress of 4.9%.
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Experts point out that their latest predictions take into account the resurgence of infections in recent months and the new measures taken to control the spread of the coronavirus. Germany has just started a four-week partial isolation period where restaurants, bars, sports and entertainment facilities are closed but non-essential schools and shops remain open.
The Council of Experts for Economic Development Analysis was established by law in 1963 as a forum for advising political leaders.