FRANKFURT—Germany’s economy is recovering faster than was anticipated a few months ago, helped by a mild and short coronavirus lockdown, a large-scale fiscal stimulus and Berlin’s close trade links with China, according to new government forecasts.
The country’s gross domestic product should contract by 5.8% this year, a 0.5 percentage-point improvement on earlier forecasts and on par with the decline recorded in the wake of the 2008 financial crisis, the economy ministry said on Tuesday.
Germany’s growth upgrade reflects the nation’s success in cushioning the coronavirus’s economic toll thanks to a light lockdown that left most factories and offices open, large-scale testing that helped to keep Covid-19 casualties low and heavy government spending that kept the pockets of furloughed workers topped up throughout the downturn.
Europe’s largest economy, traditionally reliant on international trade, is also benefiting from a marked rebound in China and other Asian countries. Exports to China, Germany’s largest trading partner, increased by 15.4% in June compared with the same month a year earlier, the federal statistics office said last month. Exports to the U.S. dropped by 20.7% over the same period.
“Overall we expect to be looking at a V-shaped economic recovery,” German Economy Minister Peter Altmaier told reporters in Berlin. The shallower recession “means businesses have room to breathe, and many jobs won’t be lost,” he said.