The German economy is expected to shrink in the fourth quarter owing to measures to stem the spread of Coronavirus as the country prepares to initiate further lockdown measures going into Christmas and the new year.
Munich-based Ifo, an economic research institution, has revealed its climate index has fallen to 90.7 for November down from 92.5 in October, which was predated by five months of rises.
They predict this decline will continue into the future owing to German state premiers agreeing on a set of "Christmas rules" - a series of lockdown measures due to come into effect in December and continue into January.
The week prior Chancellor Angela Merkel attempted to tighten lockdown restrictions for Europe's fourth-largest economy but was rebutted by officials.
In it, proposals to help businesses are set to be extended and the federal government are set to continue funding for struggling businesses into 2021.
The German government recently announced an extension to its electric vehicle stimulus that is due to continue until 2025.
They also announced a €2 billion stimulus for its struggling automotive industry to both stop it from going under, and to aid in its transition towards greener engines.
Ifo President Clemens Fuest told Reuters: “Business uncertainty has risen. The second wave of the coronavirus has interrupted Germany’s economic recovery."
The drop was reportedly aided by "pessimistic" expectations on behalf of companies who expect coronavirus-based losses to continue for at least the next six months.
All this leads Ifo analysts to predict the economy will continue to shrink for Q4 2020.
Restaurants, bars, clubs and other entertainment venues have been closed since November 2. Schools remain open, but masks are mandatory for attending students unless the school can prove a zero infection rate.
The government's plans for Christmas are set to lift lockdown restrictions slightly to allow for families together over the festive period.
The service sector is expected to take a large hit from the lockdowns owing to their impacted ability to perform to satisfactory levels.
Germany's economy has seen both record rises and falls from the coronavirus pandemic, and the private sector is expected to shrink according to data compiled by Ifo on Monday.
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