Macroeconomic development

Global economic activity fell dramatically during the first half of the year as a result of the coronavirus pandemic. According to the latest estimates of the International Monetary Fund (IMF), the economic impact was even more severe than initially expected. While the downturn reached historic proportions in the advanced economies during the first half-year, the effects were not quite so dramatic in the emerging and developing nations due to China’s development. The Chinese economy has already pulled out of recession: following a decline of 6.8 % in the first quarter, the Statistical Office in Beijing reported a return to economic growth of 3.2 % for the second quarter. By contrast, the coronavirus is still spreading in other emerging markets such as Brazil and Russia, whose economies have not yet reached their lowest point. The global economic downturn also led to a drastic fall in oil prices, causing oil producers to curb production massively. The World Bank still forecasts growth in Russian gross domestic product (GDP) of 1.6 % for the first quarter of 2020, whereby the full impact is only likely to be felt in the growth rate for the second quarter. The effects of the pandemic are also reflected in global trade: according to IMF estimates, global trade volumes shrank by 3.5 % in the first quarter of 2020.

The measures to contain the pandemic led to the biggest drop in economic activity in the eurozone since it was established. Although most measures only came into force in March, Eurostat estimates that the year-on-year decrease in GDP in the first three months of 2020 already reached 3.1 %. Early indicators released by the Kiel Institute for the World Economy (IfW) signal a double-digit decline of over 13 %. Outside the eurozone, the economic downturn in Central and Eastern Europe in the first quarter of 2020 was less pronounced. This was particularly true in Poland and Hungary with quarter-on-quarter decreases of just 0.4 %. In comparison to the previous year, economic growth slowed to 1.7 % in Poland and to 2.0 % in Hungary. By contrast, GDP in the Czech Republic shrank by 3.3 % quarter-on-quarter and by 2.0 % compared to the first three months of 2019. In Germany, the coronavirus pandemic marks the biggest slump in economic output since the founding of the Federal Republic. In the first quarter of 2020, economic activity shrank by 2.3 % year-on-year. The IfW forecasts an even more drastic decrease in GDP of around 12 % for the second quarter. Sentiment indicators, however, suggest that the crisis has already reached its lowest point. This is also reflected in German exports. Although exports in the period January to May 2020 were down year-on-year by 14.1 % and imports by 10.3 %, there were month-on-month increases in exports (+9.0 %) and imports (+3.5 %) in May.