(Bloomberg) —
Germany faces a deeper recession than during the financial crisis, as the coronavirus pandemic shuts down large parts of Europe’s biggest economy.
The impact on 2020 growth from measures to contain the virus could be “as strong, or even stronger” than the 5% contraction caused by the financial crisis in 2008 and 2009, Economy Minister Peter Altmaier said Thursday in Berlin, adding that national output could shrink for some months in the first half by more than 8%.
“That means that after 10 years of good economic growth we will again experience a recession this year,” said Altmaier. “It’s the first since 2009, and we want it to be a temporary one and that it’s quickly put behind us and the economy emerges stronger.”
In the face of the unprecedented challenges posed by the spread of the deadly disease, Chancellor Angela Merkel’s government was widely expected to slash its forecast from the pre-crisis prediction of 1.1% growth.
The German Council of Economic Experts earlier this week predicted output to shrink by 2.8% this year, if business and movement restrictions were lifted in mid May. Should restrictions last longer or production is further halted, the economy could contract by as much as 5.4%, the group said. Either outcome would be the deepest downturn since 2009.
Altmaier offered an optimistic outlook going forward, saying Germany could be in position for “decent growth” next year and that the government planned spending to stimulate the economy.
“We all want to be able to get things going again after the health crisis has passed,” he said. “For that, we will need more than the aid package we have put together. We need a fitness program, a growth program, and we will work toward that together in the government.”
(Updates with additional comments beginning in second paragraph)
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