The DIW Research Institute Expects Germany’s Economy to Contract by 1.5% in Early 2021

The German Institute for Economic Research (DIW) said that Germany’s economy may shrink by about 1.5% at the beginning of the year, in light of the great damage that the general isolation measures to reduce Coronavirus infections affect the largest economy in Europe.

The institute added that the high number of cases is hindering economic growth, but the impact of the pandemic is less severe than last spring when work in production facilities stopped.

“More importantly, the industry has weathered the winter aggressively so far,” said Klaus Michelsen, an analyst at the institute.

The rise in exports and the strength of construction activity helped the German economy grow at a better than expected rate of 0.3% in the last quarter of last year, but the tightening of general isolation measures in the country and abroad clouded the prospects for the largest economy in Europe.