Economic institutes have revised their economic growth projections for Germany lower for 2021 on account of the latest round of lockdowns and restrictions imposed to combat the third wave of the pandemic. According to latest estimates, Germany’s economy is expected to have suffered a contraction by 1.8% QoQ during Q1 2021 due to the restrictions hampering economic activity.

Additionally, the forecast for the German GDP for 2021 has also been lowered – from 4.7% previous to 3.7%. However, the institutes feel more positive about Germany posting a stronger growth next year, revising the GDP forecasts for next year higher, from 2.7% to 3.9%.

According to latest news reports, Germany is expected to remain under lockdown at least until the end of May if not until mid-June to contain the spread of coronavirus cases. In addition, the government is also looking at tightening restrictions to contain cases in localities that have reported a high number of infections.

The latest round of lockdowns have already driven a decline in investor sentiment across Eurozone’s most powerful economy. The ZEW investor economic sentiment index declined for the first time since November 2020, coming in at 70.7 for April from 76.6 in March.