Macroeconomic development

The outbreak of the coronavirus pandemic in spring 2020 plunged the global economy into a deep recession. As the virus began its spread worldwide, countries responded with copious containment measures, including restrictions on social contact and travel, business closures, and bans on mass events. States and central banks rolled out far-reaching monetary and fiscal policy measures to cushion the economic downturn.

As the crisis progressed, leading economic research institutes made substantial downward adjustments to their outlooks for world economic output. The International Monetary Fund (IMF) projects a 4.4 % decline in world economic output for 2020. Economic output in our core markets also shrank in the reporting year. After bottoming out in the second quarter of 2020, economic activity had moved into a period of recovery as containment measures were lifted and infection rates went down. However, the rate of recovery began to slow again in fall 2020 due to the renewed acceleration of the pandemic, resulting in tighter containment measures in many areas and changes in people’s behavior. The IMF expects the global economy to only partially recover in 2021 given that economic activity will remain significantly below the level that had been projected before the emergence of the coronavirus crisis.

GDP in Germany decreased by 5.0 % year-on-year. The coronavirus crisis affected individual industry sectors to varying extents. The Bitkom-ifo-Digitalindex, calculated on the basis of the business situation and expectations, dropped sharply in the first months of 2020. After reaching its lowest level in April, the index returned to significant growth through December but remained well below its pre-pandemic level. The business climate in the ICT sector remained relatively buoyant compared with the economy as a whole.

Economic output in the United States declined by 3.5 % in the reporting year, with the U.S. economy hitting its lowest point in April 2020. This was followed by a period of recovery as social contact restrictions were lifted, although this recovery lost momentum in the second half of 2020 as infection rates began to rise again. In the countries of our Europe operating segment, those economies that are heavily reliant on the service sector were hit particularly hard by the coronavirus pandemic. Domestic consumption declined across all footprint countries; rising unemployment rates were kept in check primarily thanks to state aid programs in many places.

The following table shows the GDP growth rate trends and the unemployment/non-employment rates in our most important markets. The unemployment rate for Germany and the non-employment rates for the other countries are presented in conformance with ILO standards.