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Article - Economic Situation and Cyclical Development

Economic Situation and Cyclical Development


The German economy is gradually emerging from its slowdown. For 2020, the Federal Government expects an annual average increase in gross domestic product of 1.1% in price-adjusted terms. Economic dynamism remained restrained at the beginning of 2020. In the course of the year, the economy is likely to pick up some slight momentum.

The coronavirus pandemic has led Germany’s economy – like the global economy – into a recession. However, the 2020 interim projection, which was published in early September by the Federal Ministry for Economic Affairs and Energy, shows that the worst fears have not materialised and that the economy is recovering faster than expected. The recession in Germany has already bottomed out.

Three times a year, the Federal Government submits a projection for Germany’s overall economic development under the lead responsibility of the Federal Ministry for Economic Affairs and Energy. The annual projection is published by the Federal Government each January as part of the Annual Economic Report. The spring and autumn projections serve as a basis for the Working Party on Tax Revenue Forecasting to estimate the tax revenues. The budgets of the Federal Government, the Länder, municipalities and social insurance funds are based on the key overall economic figures that are forecast. The information provided to the European Union in the context of the Stability and Growth Pact is also based on these projections.

The 2020 interim projection falls outside the usual series of projections. It will form the basis for the next tax revenue forecast in September, thus providing a solid foundation for the 2021 budget.

The Federal Government forecasts short-term and medium-term economic development and the production potential. These estimates serve as the basis for the calculation of the maximum annual net new borrowing in the context of the 'debt brake' under Articles 109 and 115 of the German Basic Law. You can find projections from preceding years in the Archive (in German).

Key figures of the 2020 interim projection

Gross domestic product by expenditure (price adjusted)201920202021
Year-on-year change (in per cent)
Gross domestic product [1]0,6-5,84,4
Private consumption [2]1,6-6,94,7
Public-sector consumption2,74,8-0,4
Gross fixed capital formation2,5-3,75,2
- of which equipment0,5-16,512,0
- buildings3,83,82,4
- other investment2,7-1,73,1
Changes in inventories and net acquisition of valuables (contribution to GDP growth)-0,70,00,0
Domestic demand1,2-3,63,6
Net foreign demand (contribution to GDP growth) [3]-0,6-2,30,9
Private consumption [2]1,30,51,2
Gainfully active persons (domestic)45,344,945,1
Unemployed persons (Federal Employment Agency)2,272,692,58

[1] In 2020, calendar-adjusted growth is 6.1%, the rate over the course of the year is 4.9%.
[2] Including non-profit-making organisations.
[3] Absolute change in net foreign demand in per cent of pre-year GDP (= contribution to change in GDP).

Key figures on the situation of the German economy

Symbolicon für Wachstumskurve

per cent rise in gross domestic product (GDP)
in 2020 compared with the preceding year

Symbolicon für Lastenwagen

per cent rise in exports
in 2020 compared with the preceding year

Symbolicon für Geld

per cent rise in consumer spending
in 2020 compared with the preceding year

Symbolicon für Arbeiter

thousends more people in work
in 2020 compared with the preceding year

Current situation

The Economic Situation in the Federal Republic of Germany in October 2020

The German economy is continuing to recover. However, national and international pandemic activity is still hampering this recovery process. After a strong upturn in May and June, the economy went on to recover at a more moderate pace. While August saw an interruption, largely due to the vehicles and vehicle parts sector, to the recovery of industrial output, the current outlook remains bright inasmuch as new orders as well as corporate sentiment have recently been showing significant improvements. Consumer spending is also recovering. Since May, retail turnover (excluding vehicles) has been higher than before the crisis. Car sales have picked up markedly and are expected to recover further. The indicators of sentiment are pointing to a rise in consumer spending in the second half of the year. The coronavirus pandemic continues to have a strong impact on the labour market, but the situation is slightly improving. Unemployment declined further in September and short-time employment is becoming less important every month. In August, gainful activity increased for the second month in a row. Leading indicators are suggesting further improvements.

Overall situation: sustained economic recovery

The German economy is gradually recovering. After a powerful rebound in May and June that followed in the wake of the hard lockdown, the recovery process has now lost some of its momentum. The coronavirus pandemic continues to impact the behaviour of consumers and investors alike. This is especially true of economic sectors in which social contacts play a critical role. In spite of this overall environment and notwithstanding a worrying level of pandemic activity, the current economic indicators are pointing to a continued economic recovery, supported by the far-reaching economic stimulus measures taken by the Federal Government. In fact, the impressive upturn during the third quarter is likely to translate into by far the highest quarterly rate of growth ever registered. As far as the fourth quarter is concerned, the indicators are suggesting a continued, but slower, recovery process. In their current joint economic forecast, leading economic research institutes are expecting GDP to decline by 5.4% over the course of the year. By contrast, the interim projection put forward by the Federal Government in early September had predicted a 5.8% decline.

For more information about the economic situation in October, please click here.

Latest press releases

Press releases

  • 17/04/2019 - Press release - Economic Situation and Cyclical Development

    Minister Altmaier: Slow period is over, but should serve as a warning: we need to keep improving the business environment.

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  • 30/01/2019 - Press release - Economic Situation and Cyclical Development

    Minister Altmaier: To develop the economy, we need to focus on stimulating growth and on technologies for the future

    Open detail view

Further information

Graph on the subject of Economic Development; Source: