Germany expects record recession in 2020 due to coronavirus pandemic

Germany has slashed its economic growth forecast for this year, the economy ministry said on Wednesday, predicting the coronavirus pandemic would plunge Europe's largest economy into the deepest recession in its post-war history.

The government cut its estimate for gross domestic product growth in 2020 to -6.3% from +1.1% predicted in January, the ministry said. It expects the recession to bottom out in the second quarter and economic activity to pick up again after that.

For 2021, the government expects the economy to rebound with an expansion rate of +5.2%. The forecasts are based on the assumption that authorities can gradually unwind lockdown measures to contain the spread of the coronavirus.

German annual inflation slowed further in April to well below the European Central Bank's target, data showed on Wednesday, giving the ECB additional leeway to deploy stimulus policy to counter the economic impact from the coronavirus pandemic.

German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 0.8% year-on-year after posting a 1.3% increase in the previous month, the Federal Statistics Office said.

The reading was the lowest since November 2016 and came in above a Reuters forecast for 0.5%.

On the month, EU-harmonised prices rose by 0.4% in April. That compared with a Reuters forecast for 0.1%.

The European Central Bank targets inflation of close to but below 2% for the single currency bloc.

The European Central Bank has ditched a cap on how many bonds it can buy from any single euro zone country, clearing the way for potentially unlimited money-printing as it scales up its response to the pandemic.