Forecasts for Germany's 2009 GDP currently range from -3 % (Allianz) at the most optimistic to -7 % (Commerzbank) at the gloomiest end.
Let's take a closer look at what the various forecasts actually imply:
Seasonally-adjusted quarterly GDP dropped all through 2008, i.e. Q1 GDP was the highest, and it went downhill from there:
Q1 to Q2: -0.5 %
Q2 to Q3: -0.5 %
Q3 to Q4: -2.1 %
We know that Q1 2009 will be dismal, probably around -3% compared to Q4. Compared to Q1 last year, that would be a drop of 6.0 %.
Now let's assume the economy will stagnate after Q1, i.e. no further fall, but also no growth.
This would mean that the year-on-year growth gets better (or rather: less bad) from quarter to quarter:
- Q2 would be -5.6 % compared to Q2 last year
- Q3 would be -5.0 %
- Q4 would be -3.0 %
Average for 2009 would be -4.9 %.
In other words:
Anybody who forecasts a drop of more than 5 % implicitly assumes that things will keep going downhill:
- To reach -6.0 %, you would need to (e.g.) assume further quarter-on-quarter drops of 1 % in Q2 and Q3, followed by a stagnating Q4.
- To reach -7.0 %, you would need to assume drops of 1.8 % in both Q2 and Q3.
And anybody who forecasts a drop of less than 5 % assumes that things will start improving:
- To reach -4.0 %, you would need to assume quarter-on-quarter growth of 0.7 % in Q2 and Q3, followed by a stagnating Q4.
- To reach -3.0 %, you would need to assume growth of 1.5 % in both Q2 and Q3.
My personal guess is that things will more or less stagnate beyond Q1, possibly grow a bit. That would leave us between -4.5 % and -5.0 %.