Report: German government expects economy to shrink by 6.3 per cent

Berlin (dpa) – The German government expects the country’s economy to take its biggest hit in decades due to the coronavirus pandemic, the Sueddeutsche Zeitung newspaper reported on Monday.

In a spring forcast that the government is due to issue on Wednesday, its experts are predicting that the gross domestic product will fall by 6.3 per cent compared to last year, the newspaper said.

The lowest point of the slump has reportedly been reached already, with the experts saying that economic growth will stabilize in May and then rise back up significantly in the second half of the year.

Despite significant state aid, large bankruptcy waves and 3 million unemployed people are expected. The government also believes that tax revenues will drop by around 82 billion euros (89 billion dollars).

Opposition lawmaker Michael Theurer of the pro-business Free Democratic Party said he believes the forecast is optimistic.

“The disruption of the economic cycle could bring about colossal collateral damage,” he said.

Others have also predicted worse numbers, with the Nuremberg-based Institute for Employment Research for instance forecasting that the German economy will shrink by 8.4 per cent this year.

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