The biggest euro area economy is set to shrink severely this year due to containment measures in place to slow the spread of the coronavirus, or Covid-19, pandemic, the industry group BDI said Monday.
Germany’s gross domestic product is likely to decline 3 to 6 percent this year, if economic activity is interrupted for a maximum of six weeks, BDI said.
Global economic output is forecast to fall 3 percent, which will be the second fall in the past 50 years. In 2009, the world economy declined 1.7 percent.
In a best case scenario, the global trade will fall 3 to 5 percent, the BDI said.
A strong recession in the US, Europe and Japan can no longer be avoided this year, the group predicted. Eurozone and the EU is set to witness a 3-5 percent decline in output and the United States may see a 2-4 percent fall.
The Japanese economy may shrink 1 to 3 percent, while China may log growth of up to 2 percent, the BDI said.
The fiscal support and revitalization packages in the EU are still insufficient and further strong measures are required in may countries, the BDI said. Germany has advanced with a large package, it said.
The group urged a significant contribution at the supranational level in Europe. “After the quarantine exit, a long-term recovery program must begin,” BDI said.
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