BERLIN, June 16 (Xinhua) -- German gross domestic product (GDP) would drop by 5.1 percent in 2020 and rise by 3.2 percent in 2021, according to a quarterly economic report published by the Halle Institute for Economic Research (IWH) on Tuesday.
In the first half of 2020, the COVID-19 pandemic had exacted "a heavy toll" on the German economy, causing a slump in production that would "not be fully recovered" within the next year, according to IWH.
In Germany, the unemployment rate would increase "sizably" this year, from 5 percent in 2019 to 6.3 percent in 2020, according to IWH. The latest employment figures for May had shown the unemployment rate went up to 6.1 percent.
Consumer prices in Germany are expected to be only 0.4 percent higher than in the previous year, according to IWH. On Tuesday, the Federal Statistical Office (Destatis) announced that the inflation rate in Germany declined to 0.6 percent in May.
"The trough of the recession is likely to be reached in the second quarter," said Oliver Holtemoeller, head of the department macroeconomics at IWH, noting that in Germany the pandemic had receded while restrictions had been gradually eased since May.
Although a number of measures to combat the pandemic were increasing production costs, the negative effect was offset by low energy prices and the reduced value-added tax (VAT), according to IWH.
Supported by economic policy measures, the German economy was likely to "recover slowly" given the persistent high levels of uncertainty, especially since a strong upturn in exports was not expected, IWH noted. Enditem