News from 2021-02-24 / KfW Research
KfW Business Cycle Compass February 2021
Continued high infection rates, the risk of more contagious virus mutations and the resulting extended restrictions will cause Germany’s economy to contract sharply in the first quarter of 2021. But with increasing progress in the rollout of vaccines and restrictions being eased first cautiously and then more broadly as the virus is successfully controlled and a third wave is avoided, a noticeable recovery will emerge in the spring and a growth spurt in the summer. Germany’s GDP is forecast to grow by 3.3% in 2021 and 3.4% in 2022. The pre-crisis level will be reached again in the fourth quarter of 2021. Driven by vigorous catch-up growth, GDP in the euro area is set to grow by 4.6% in 2021 and 4.0% in 2022. The euro area as a whole, however, will not return to the pre-crisis level yet in 2021.
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