Market Overview – Germany


As a business location, Germany is in better shape than you might expect after the pandemic year of 2020. Is this a new German summer fairytale?


Hendrik Böhrnsen, Managing Director, ADREALIS Service Kapitalverwaltungs-GmbH, Munich


One year on, the current situation in Germany is still being dictated by COVID-19, however. Just a few months ago there was considerable optimism that the second wave of the virus would sweep through Germany and that the economy would continue to recover rapidly from the consequences of the pandemic. Germany’s gross domestic product (GDP) bounced back up in the summer of 2020, while the country was even described then as Europe’s engine of growth. However, since November 2020, a renewed shut-down has been slowing the economy once again, with economic output stagnating after a major increase of 8.5 per cent in the third quarter. For 2020, the year of Covid-19, the overall slump in economic output was 5.5 per cent, which is slightly lower than during the global financial crisis of 2009.

In December 2020, it was assumed that the infection control measures in place since November would remain in effect unchanged until March 2021 and thus, that economic output would also decline in the first quarter of 2021; thereby meeting the requirements for a "technical" recession. Price-adjusted GDP is expected to fall by 0.7 per cent quarter-on-quarter in the first quarter of 2021, while economic output is expected to be a good 4 per cent below the pre-crisis level overall, by the end of the first quarter of 2021.


Even though we have now moved almost seamlessly from the second wave to the third wave of the virus and even though infection control measures have been extended until at least the middle of April 2021, we can still expect economic output to recover by a projected three per cent over the rest of 2021. In 2022, the recovery will continue, although its tempo will decrease significantly over the previous year. On average for the year, economic output should then increase by 2.5%. Germany’s strength as a business location was demonstrated in the summer of 2020, when the economy grew by 8.5 percent; as well as by its recovery after the global financial crisis of 2009. However, this time round, the recovery will be more difficult and not as straightforward as after the global financial crisis of 2009. Unless the pandemic is now contained effectively, any economic recovery will not be sustainable. This is all the more true, since coronavirus mutations are now spreading; and these are more contagious and increase the risk of infection.

The recovery is also expected to be very uneven, as sectors of the economy were hit by the Covid-19 pandemic to differing degrees. Industry was able to increase production further in December, despite tighter lockdown measures. One pillar of this has been construction, especially housing construction. In addition, demand for logistics real estate is likely to remain high, due to booming online trading.

more: https://www.yumpu.com/en/document/read/65724787/the-xolaris-market-news-n01
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