FX.co ★ Bundesbank: German economy to recover after severe recession

Germany is planning to become one of the first to revive its economy after the coronavirus pandemic. According to the Bundesbank's projections, the country's economic indicators will return to normal in the second quarter of this year. The main contributor to Germany's ability to make up the lost ground will be the large-scale fiscal stimulus program approved by the government. However, it will not be able to avoid negative effects of the coronavirus crisis on its economy. By the end of this year, the European biggest economy is expected to shrink by 7.1 percent, while next year, it is likely to enter an active recovery phase.

This year, Germany's economy will hardly rebound significantly as some restrictions are still in place. Nevertheless, economists predict at least a slow recovery from a coronavirus-induced recession in the second half of the year. Chancellor Angela Merkel has recently introduced another stimulus package worth 130 billion euros, aimed at boosting consumption and investment in infrastructure. The total cost of Germany's economic stimulus measures exceeds 1.3 trillion euros.

Notably, this projection assumes total victory over the COVID-19 pandemic. The Bundesbank added that there was still a very high level of uncertainty about future economic developments. In a more severe scenario, in case the country faces a second wave of the coronavirus, the economy may contract by 10%.