Economy

German economy set for rapid growth over summer months - Bundesbank

Coronavirus vaccine may be necessary before a complete rebound is possible

Photograph: iStock

Mon Aug 17 2020 - 11:11

The Germany economy is set for a rapid and broad-based recovery after an unprecedented peacetime contraction in the spring, but a coronavirus vaccine may be necessary before a complete rebound is possible, the Bundesbank said on Monday.

Europe’s biggest economy shrank by a tenth in the second quarter but has been making a comeback since much of the epidemic was contained and many restrictions on businesses and daily life were lifted.

“The clear and broad-based recovery in macroeconomic performance, which began after the low point in April, will continue,” the central bank said in a monthly report.

“The German economy should grow very strongly in the summer quarter of 2020,” it said.

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Private consumption is expected to make a “solid contribution” to the rebound while industry and capital goods investment will also be key, said the Bundesbank, which earlier predicted a 7.1 per cent full-year drop in gross domestic product.

Still, the bank warned that the pandemic has not been contained globally and this will weigh on German exports and industrial production.

“This is likely to stand in the way of a comprehensive recovery in demand for German industrial products,” it said. “Until an effective medical solution, like vaccination, is available, economic activity in some domestic service industries will also remain limited.” – Reuters

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