Recession in Germany unavoidable due to coronavirus outbreak - economic advisors

The coronavirus outbreak has made a recession in Europe's largest economy inevitable in the first half of this year, Germany's council of economic advisers said on Monday, predicting that output could shrink by up to 5.4% this year. The panel, which advises the government on economic policy, said its baseline scenario - in which the economic situation would normalise over the summer - was for the economy to contract by 2.8% this year before potentially growing by 3.7% next year.

But a more marked 'V' shaped recession curve with widespread halts to production or longer-lasting public health measures, could lead to the economy contracting by 5.4% this year before growing by 4.9% in 2021 thanks in part to a statistical overhang, it said. "The coronavirus outbreak has stopped the incipient recovery," the advisors said in a report that they handed to the government on March 23 but only published on Monday. "The German economy will shrink significantly in 2020."

Economists usually define a recession as two consecutive quarters of negative growth.