German economy to shrink 1% in Q4, more in Q1 - DIW

BERLIN (Reuters) - The second hard lockdown imposed in response to a surge in coronavirus infections will hit the German economy this winter, the DIW research institute said, forecasting that output would fall 1% in the final quarter of this year.

The think tank said on Monday that though the economy had made up much of the ground it had lost during the first lockdown from March, the newly imposed restrictions would once again impose serious costs.

The first quarter of 2021 would see the ecomomy shrinking by even more than in the present quarter, DIW said, adding that things would not improve until the lockdown was over.

"The German economy can only return to a recovery path if the situation substantially calms down," the institute said. Its forecaster Claus Michelsen added: "Even if it's painful, we'll have to endure the hard lockdown until at least the end of January."

The German government closed most shops early in December after a partial lockdown in the previous month failed to achieve the hoped-for dent in the coronavirus's spread.

(Reporting by Thomas Escritt; Editing by Riham Alkousaa)