Germany’s economy is set for its worst year since WWII with exports in ‘free fall’ and GDP expected to shrink by 6.6 per cent due to coronavirus
- Germany economy on course to shrink by 6.6 per cent this year, researchers say
- Downturn would mark the largest yearly fall the country has suffered since 1949
- Comes after exporters reported a collapse in orders amid coronavirus pandemic
- The economy will not return to pre-crisis levels until end of 2021, study warns
- Here’s how to help people impacted by Covid-19
The German economy is on course to shrink by 6.6 per cent this year after demand for exports collapsed amid the coronavirus pandemic, researchers have warned.
Europe’s largest economy shrank by 1.9 per cent in the first three months of this year and will contract by a further 12.2 per cent in the next quarter, the respected IFO Institute reported Tuesday.
The decline would be the largest the Germany economy has suffered since 1949 and would not be reversed until the end of 2021 at the earliest, researchers said.
The German economy is expected to shrink by 6.6 per cent this year after a collapse in demand for exports, researchers have warned (pictured, a worker at the VW factory in Wolfsburg)
It comes after IFO reported a collapse in demand for German exports, on which the country’s economy heavily relies.
Export expectations fell across almost all sectors, with the car industry especially badly affected.
Mechanical engineering and textiles were also badly hit, while chemicals and electrical engineering sectors reported only modest declines.
The dire economic news comes as Germany attempts to feel its way out of lockdown after the number of new coronavirus cases and deaths declined significantly from the peak of infection around a month ago.
The Robert Koch Institute reported 1,114 new cases of the virus Tuesday – up slightly from Monday’s figure but still well below the peak of 6,294 on March 28.
A graph based on a survey of 2,300 German businesses and their export orders for the next three months. The point score on the left-hand side represents the difference between businesses which said their exports were increasing and those who said it is declining
Another 163 deaths from the disease were also logged Tuesday, also a slight increase from the 110 reported Monday but well below the peak of 315 on April 16.
The country has confirmed 156,337 cases of the virus since the start of its outbreak while a total of 5,913 people have died.
As the research was published Tuesday, Economy Minister Peter Altmaier was warning that the country’s gastronomy sector may need a bailout to keep going.
The government has already made loans and a short-time work scheme available to the sector and leaders of Chancellor Angela Merkel’s coalition have agreed to reduce sales tax on meals to 7 per cent for a year, said Altmaier.
‘As Economy Minister, I am saying if, contrary to expectations, it lasts a long time until a full opening is possible, we will have to reconsider aid, then we would need something like a rescue fund for gastronomy,’ he told ZDF television.
German Economy Minister Peter Altmaier has warned the country’s gastronomy sector may need a bailout, on top of a £650billion stimulus package for the rest of the economy
Germany has started to ease some restrictions, with some shops and factories now open, but most strict social distancing rules are still in place and Germans are required to wear protective face masks on public transport and in most shops.
The government has introduced a range of measures, including a 750 billion euro (£650billion) stimulus package, to help Europe’s biggest economy weather the predicted recession
The rescue package included a £480million loan to profit-making airline Condor announced on Monday.
Ministers are also thought to be in talks with national carrier Lufthansa about a rescue package that could cost £9billion.
Altmaier said he wanted restaurants and guest houses to open as soon as possible but that it must be safe and the priority was to ensure that the infection did not spread.
‘We need solutions for this and we are working on it,’ he said.