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German gov't lowers economic forecast for 2021 to 3 pct

Economy Materials 27 January 2021 21:22
German gov't lowers economic forecast for 2021 to 3 pct

Following a 5.0 percent slump in economic output in 2020, the German government is expecting gross domestic product (GDP) to grow by 3.0 percent this year, according to the annual economic report for 2021, which was approved by the government on Wednesday, Trend reports citing Reuters.

In October, one month before Germany entered a partial lockdown due to the second wave of COVID-19, the government still expected GDP to grow by 4.4 percent this year.

"The upswing will continue in 2021, albeit with less momentum," said German Minister for Economic Affairs Peter Altmaier in a statement, adding that the "picture is divided" as the industry currently remained robust, while the service sector was particularly affected.

As the initial partial lockdown failed to reverse the trend of COVID-19 infection and death rates, Germany further tightened restrictions on public and economic life that included the closure of schools, restaurants, and non-essential shops, as well as for contact.

The tougher lockdown caused a "significant slowdown in economic momentum," resulting in a weak outcome for the final quarter of 2020 and also dampening the start of this year, the annual government report said.

Once the pandemic situation had "stabilized," the German economy would "pick up speed again in the course of the year," according to the government. However, pre-crisis economic output was not expected to be reached again until mid-2022.

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