Germany to Witness More Severe Economic Contraction Than in 2009

Arslan Butt•Thursday, March 26, 2020•1 min read

Even as the government unveiled a massive stimulus package worth 750 billion euros, the Ifo institute estimates that the German economy could contract by as much as 20% in 2020, depending on the extent of the lockdown period in Germany because of coronavirus.

As part of the new measures, the government in Germany will supplement the existing budget with an additional 156 billion euros, which the government aims to generate through new borrowing. In addition, there is a provision for 100 billion euros worth of credit for loans to SMBs in the package.

Chief economist at ING Germany, Carsten Brzeski, has cautioned that the economic contraction could be more severe than the one experienced during the 2008-09 financial crisis. Even if the lockdown were lifted by next month around Easter, it would still cause Germany’s economy to shrink by over 4% YoY this year.

So far, the number of confirmed cases in Germany has exceeded 33,000 but the country has recorded only around 164 deaths. Despite relatively optimistic conditions than several other countries, the business climate in Germany suffered a significant worsening during March as a result of the enforced shutdowns.

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Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.