The German economy is facing a deep recession, with a decrease in GDP by 8.8% in 2020 if a second COVID‑19 outbreak requires further containment measures or prolongs uncertainty. The fall in GDP is estimated at 6.6% if the virus subsides by the summer. Containment measures have been shorter and less stringent than in other major European economies, thanks to widespread testing and high health sector capacity. This has moderated the economic downturn, but uncertainty and reduced demand are still having a significant effect on business investment and exports in key sectors, in particular manufacturing. A second outbreak would undermine the benefits of an early and well‑managed reopening. Increased uncertainty would underpin greater precautionary saving by consumers and weigh on investment at home and abroad, with negative consequences for Germany’s capital goods exports.