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German economic recovery loses momentum - institutes

·1-min read
FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) near Frankfurt
FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) near Frankfurt

BERLIN (Reuters) - Europe's largest economy will recover more slowly from the coronavirus pandemic than originally predicted, Germany's leading economic research institutes forecast on Wednesday.

As Reuters previously reported from sources, the institutes expect the economy will shrink by about 5.4% in 2020, a bigger decline than the 4.2% they forecast in April.

The institutes' forecast, which forms the basis for the government's own economic predictions, expects a rebound of 4.7% in 2021, also more pessimistic than their April forecast for 5.8% growth. They expect growth of 2.7% in 2022.

The institute said the recovery was being held back by sectors particularly hard hit by social distancing restrictions such as restaurants, tourism, events and air travel.

"Activity in this part of the German economy will ... catch up with the rest of the economy only once measures to control the pandemic have largely been dropped, which we do not expect before next summer," said Stefan Kooths, head of forecasting at the Kiel institute.

(Reporting by Emma Thomasson; Editing by Riham Alkousaa)