The corona pandemic leaves substantial marks in the German economy and its impact is more persistent than assumed in spring. In their autumn report, the leading German economic research institutes have revised their economic outlook downwards by roughly one percentage point for both this and next year. They now expect gross domestic product to fall by 5.4% in 2020 (previously -4.2%) and to grow by 4.7% (previously 5.8%) in 2021 and 2.7% in 2022.

The recovery is being held back by those sectors that are particularly dependent on social contacts, such as restaurants and tourism, the event business and air traffic. In addition, investment is slow to recover because many companies have seen their equity positions deteriorate as a result of the crisis. The recovery is being driven primarily by exports, which had contracted particularly sharply in the course of the crisis.

The pre-crisis level of output will not be reached until the end of 2021 with GDP then being still 2.5 percent below the level that would have prevailed without the pandemic. Normal capacity utilization is expected to be reached only by the end of 2022.

The most important risk to the forecast stems from the still uncertain course of the pandemic. The institutes assume that starting in spring next year, disease control measures can be rolled back to such an extent that they no longer have a significant impact on economic activity by autumn. The unclear extent of corporate insolvencies in Germany and abroad as a result of the crisis also contributes to forecast uncertainty. In addition, various trade conflicts remain a source of concern. A positive risk to the outlook is the sharp rise in private savings which, if released more quickly than assumed in the forecast, could translate itself into a quicker than anticipated recovery, particularly in the consumer-related sectors of the economy.