German economic institute Ifo said on Tuesday it expects the economy to contract by 6.6% this year due to the coronavirus and that national output will not return to pre-pandemic levels until the end of 2021.
Europe’s largest economy shrank by 1.9% in the first three months of 2020, Ifo said, adding that it was expecting a 12.2% contraction in the second quarter based on companies’ capacity utilisation data.
Ifo said last week its survey of German business morale crashed in April in its most dramatic fall on record, hitting the lowest reading since reunification as the coronavirus pandemic sends Europe’s largest economy into a deep recession. Highlighting the business impact of the virus, German car and truck maker Daimler last Thursday reported a plunge of nearly 70% in first-quarter operating profit and said the cash flow it uses to pay dividends would fall this year.
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