General framework

The data for 2018 to 2020, adjusted for price and calendar effects,are based on information and estimates available as of February 2021. Source: Oxford Economics

Global economic development in 2020 was heavily marked by the effects of the Covid-19 pandemic. Following the first wave of infection from February to early summer 2020, the economy of many countries experienced a noticeable recovery up to September 2020. However, a second wave significantly delayed a return to growth. The more targeted nature of the measures taken by many countries to combat the spread of the virus during the second wave of infection meant that the economy overall was no longer as heavily restricted, but this came at the expense of some sectors, such as tourism and catering in particular.

The supply side was put under strain by interruptions to international production chains, particularly in the area of capital and durable consumer goods. Demand was adversely affected by lower household incomes and increased uncertainty. Durable consumer goods were particularly affected in this respect. In addition to the manufacturing sector, social distancing severely affected many service sectors such as transport and hospitality.

The Covid-19 pandemic worsened what was in some cases already negative development, as many economies had already been experiencing a significant slowdown in economic growth. Global trade, for example, had barely grown in 2019.

The major economic regions were affected by the economic crisis to different degrees. By implementing drastic measures, China managed to reduce the spread of the virus comparatively quickly, thus limiting the impact on its economy. China was one of the only industrial nations whose economy grew in 2020, although at a much more moderate rate than in previous years. As a result, growth in the Asia/Pacific region only slowed slightly. The slowdown was signi­ficantly stronger in the USA and the whole of North America. Since foreign trade and cross-border production chains are less significant than in Europe or some Asian countries, there were also fewer external negative effects.

Europe was affected more significantly by the effects of the Covid-19 pandemic. Economic output fell sharply, particularly in the major Western European economies of the United Kingdom, Italy, Spain and France. The economies of Scandinavia and Eastern Europe, on the other hand, suffered less; Germany also recorded a comparatively smaller, but nevertheless substantial, decline in economic output. Germany’s strong dependence on foreign trade had a negative impact, particularly for capital goods. However, due to its solid public finances, Germany was better equipped than other countries to counter the negative consequences of the Covid-19 pandemic. Among other things, the economy was supported by loans, tax relief and the short-time working program. The lower oil price and a continuation of the highly expansionary monetary policy of the European Central Bank (ECB) also provided economic support.