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Europe’s largest economy slows down due to coronavirus

UNITED STATES (OBSERVATORY NEWS) — The German economic growth rate in 2020 may be lower than previously deteriorated estimates from the spread of coronavirus, said the head of the German Central Bank, Jens Weidmann.

The Bundesbank in December halved to 0.6% and reduced its forecast for real GDP growth for 2020.

“The German economy grew on average by only half a percent in 2019. According to the Bundesbank forecast from last December (adjusted for the calendar), GDP should grow at the same low rate in 2020,” Weidmann said at a press conference.

According to him, the conclusion of the first agreement in the trade conflict between the United States and China initially prevented the danger of further escalation. A positive factor for the economy is also that the “hard” Brexit has been prevented.

“However, significant uncertainty remains. Future economic relations between the UK and the EU have not yet been resolved,” said the head of the Central Bank of Germany. “Geopolitical uncertainty remains high.”

China now accounts for almost a fifth of the global economy, and the coronavirus epidemic and efforts to contain it significantly affect the Chinese economy. This should worsen China’s economic performance in the first quarter, as well as have a significant impact on global growth.

This reduces the demand for goods and services, reduces the flow of tourists, and global value chains are already disrupted. “In the short term, the spread of coronavirus also poses an additional risk to the German economy,” Weidman emphasized.

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