There will be a “serious” recession because of the coronavirus, not only did many readers of the stars and zodiac signs predicted but also the experts in the economy field. However, the economy could recover strongly in 2021, according to the top economists in the spring report.
According to the expert panel, the gross domestic product (GDP) will shrink by 4.2 percent, the unemployment rate will peak at 5.9 percent. They suspect that the economy will have fallen by 1.9 percent in the first quarter, and even expect a decline of almost ten percent between April and June. That would be more than twice the size of that during the world financial crisis in the first quarter of 2009.
Coronavirus-driven recession could be worse than 2008 financial crisis: IMF’s chief economist
2.4 million short-time workers expected
The unemployment rate will skyrocket to 5.9 percent and the number of short-time workers to 2.4 million. For the full year, the researchers expect an average of 2.5 million unemployed, almost a quarter-million more than in 2019.
Experts say the Government needs to “point forecast”
If things turned out differently, the forecast could only have a short lifespan. But the government needs such a ” point forecast”, explained Oliver Holtemöller from the Institute for Economic Research in Halle (IWH). Because it serves as the basis for her own projections, such as budget planning and tax estimates.
If the shutdown lasts only one month longer, then the economic development is depressed by a further 1.5 percentage points. If the infection situation requires it, then a longer shutdown would also make economic sense, said Holtemöller. A gradual easing, however, the researchers consider the strict current conditions to be important – as far as health-related is possible. The lockdown cannot be extended indefinitely.
The experts do not see the need for an economic stimulus package to boost the economy. State support measures are likely to keep job losses within limits, and short-time work benefits support people’s incomes.
Overall, the loss of income is not so great, believes Torsten Schmidt from the RWI – Leibniz Institute for Economic Research in Essen. The savings rate is likely to rise in the crisis, and this money could then boost consumption again in the coming year.