Senior private bank economists expect a recovery in Germany from spring onwards, driven by consumption and exports. In the current first quarter, GDP is likely to shrink by between 1.0 and 1.5 percent due to the coronavirus lockdown, according to the spring forecast. After that, things have to go up.
“The decline in growth at the start of the year will be more manageable the more politicians manage to control the uncertainty that is holding them back,” said Christian Osig, chief executive of the German Banking Association (BdB), referring to the forecast.
For 2021, private banks expect economic growth of 3.8 percent, which will follow a decline of 4.9 percent last year. They expect an increase of about four percent for next year. The economy could reach pre-crisis level in 2022.
Thus, the strongest pillars of growth will be exports and private consumption: while firms are likely to get a strong tailwind from revitalized global trade, many consumers must end the epidemic’s “compulsory saving” and consume again. “We expect private household consumption to increase by 3.5 percent, which will by far be the largest increase in private consumption in Germany since reunification,” Osij said.