German government advisors: Recession in 1H 2020 is unavoidable

The German council of economic advisors offered their take on the economic fallout from the coronavirus outbreak and warned of the deepest recession since 2009.

Key points:

• The virus outbreak has put an end to the incipient economic recovery.
• Recession in 1H 2020 is unavoidable.
• The German economy will shrink significantly this year.
• The baseline scenario is the economy to shrink by 2.8% this year and grow by 3.7% in 2021.
• The baseline scenario is for the economic situation to normalise over the summer.
• The second scenario involves a V-shaped trajectory with widespread production halts.
• That will see the economy shrink by 5.4% this year and grow by 4.9% in 2021.
• The third scenario involves a U-shaped trajectory where recovery begins next year.
• That will see the economy shrink by 4.5% this year and grow by 1.0% in 2021.