DIW-Chef holds fast recovery of the economy for wishful thinking

DIW President Marcel Fratzscher warns that in 2021 could face a second recession. He looks significantly more pessimistic for the new year, as many others. Too much could still go wrong.

The President of the German Institute for economic research (DIW), Marcel Fratzscher warns against too high expectations of economic development this year. “Many economic forecasts are currently from the desire of a speedy end of the pandemic and immediate recovery in the year 2021 the world,” wrote Fratzscher in on Friday published a guest contribution for the Berliner “Tagesspiegel”. “This should prove to be an Illusion.”

Too many things could go wrong in the coming year, said Fratzscher. “The recovery would be more difficult and take longer, than it can imagine a lot of currently.” The German economy shrink in the fourth quarter and “this could do very well in the first quarter of 2021, so that the economy is likely to fall into a second recession”.

Fratzscher: insolvencies could rise significantly

“So 2021 may be the year of disillusionment, at least with regard to the economy,” said Fratzscher. “Corporate insolvencies could rise significantly, since many are so heavily in debt heavily, they will either get no Bank loans more or no more want to have depleted reserves, the recovery of which will expire deferment of the requirement to submit for company insolvencies.”

With the problems of the company Fratzschers is expected to rise evaluation according to unemployment: “in particular, the most Vulnerable, such as the mini-jobbers inside, will probably pay the highest price.”