The Bundesbank expects the German economy to shrink by 7 % this year

Frankfurt (Germany), 5 jun (EFE).- The Bundesbank expects the German economy to shrink by 7 % this year but grow again by 3% in 2021 and 4% in 2022, and considers that the measures taken by the German Government are going to contribute significantly to the stabilization.
The Bundesbank today released its new projections of semi-annual macroeconomic growth, and inflation.
In December, the central bank of Germany forecast that the German economy would grow this year by 0.6 %, so that there has been a strong downward revision.
For 2021 and 2022, the Bundesbank predicted growth of 1.4 per cent respectively, resulting in a strong upward revision as a result of the recovery of the “deep recession” in the second quarter.
“The state finances are making a sizeable contribution to the stabilization”, according to the president of the Bundesbank, Jens Weidmann.
“A further stimulus is appropriate in the current situation, and I value the program short-term positive,” said Weidmann.
The partners of the grand coalition of chancellor Angela Merkel agreed Wednesday to a plan of reactivation of the economy pospandemia of a volume of 130,000 million euros to support families, local Governments, and that provides for a reduction of taxes.
As a result of the pandemic and the measures to combat it, the economy has contracted in an extraordinary way in the first quarter of 2020.
For the second quarter, the projections of the Bundesbank see another drop, even larger.
However, the Bundesbank believes that the bottom has been touched in April, and the economy begins to grow again, although “the recovery is contained”.
The Bundesbank assumed in the projections that by the middle of next year will be available a medical solution effective to the pandemic, which will encourage the recovery.
“On the subsequent evolution there is a level of uncertainty is very high,” added Weidmann.