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ECONOMY

Coronavirus: German industry fears ‘longest recession’ since reunification

The economic upheaval caused by the fast-spreading coronavirus threatens to plunge Germany's crucial industrial sector into "the longest recession since reunification", a powerful industry body said Thursday.

Coronavirus: German industry fears 'longest recession' since reunification
A German and EU flag stands between construction cranes in Berlin. Photo: DPA

Germany's export-reliant industrial sector is already in the midst of a recession, with car manufacturers especially feeling the pain from months of China-US trade tensions and Brexit uncertainty.

As the deadly coronavirus wreaks havoc on international supply chains and saps consumer demand, Germany's BDI industry federation said worse was to come.

READ ALSO: German economy is 'down on its knees': Is a recession looming?

“German industry is facing the longest recession since reunification” of the country in 1990, BDI said in a quarterly report.

The sector, a key growth driver in Europe's top economy, has already seen six consecutive quarters of shrinkage.

In the final quarter of 2019, German industrial production fell by 5.7 percent year-on-year.

The BDI said the combined effects of weak global growth, increased uncertainty and factory disruptions were having “a negative effect” on companies' willingness to spend money and invest.

The entrance to the Hannover Messe, a world famous tech fair which was cancelled on Wednesday over coronavirus fears. Photo: DPA

The industry body now expects the German economy as a whole to grow by just 0.5 percent in 2020, compared to 1.1 percent growth forecast by the government in January before the virus spread across the world.

The BDI urged the German government to use its fat budget surpluses to support affected industries and encourage investment.

READ ALSO: Germany debates how to spend fat budget surplus

Berlin must “swiftly” take action “to adequately respond to the crisis”, it said.

It added that it welcomed recent indications from Berlin suggesting that Chancellor Angela Merkel's government stood ready to support the German economy.

Finance Minister Olaf Scholz last week said the government had the means to “launch a fiscal stimulus package” if the situation worsened.

Highlighting the bleak outlook, German car parts maker Continental on Thursday said it expected car production worldwide to fall by two to five percent in 2020, partly because of the huge impact of the coronavirus on China.

READ ALSO: German car parts giant Continental to cut 5,500 jobs

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CULTURE

‘People liked the silence’: How Berlin’s club scene is struggling after lockdowns

Berlin's clubs are suffering from staff shortages, a lack of guests... and neighbours who've grown used to the silence, representatives for the scene say.

'People liked the silence': How Berlin's club scene is struggling after lockdowns

Some operators from Berlin’s club scene are bracing themselves for a difficult autumn. For months now, people have been allowed to dance again and life has returned to normal in the dark corners of Berlin’s famous nightlife scene.

But the clubs have far from recovered from the pandemic. They face staff shortages, rising prices and the prospect of a return to Covid restrictions in the autumn.

“We go into the autumn with huge fear, because the omens are totally unfavorable,” said association head Pamela Schobeß.

Spring and summer went anything but smoothly, she said. “There has been an oversupply of events. People aren’t going out as much, and some are still afraid to move around indoors.”

Money is also an issue. “A lot of people are afraid of rising energy prices.”

The industry lost workers during the pandemic and it’s hard to convince them to come back with the outlook for the autumn looking so gloomy, Schobeß says.

Her colleague Robin Schellenberg tells a similar story. People have switched to various other jobs and would even rather work on a supermarket checkout, which may have been considered less sexy in the past. Now, he says, some have learned to love not having to work nights.

READ ALSO: 

Schellenberg runs the Klunkerkranich, a small club on a parking garage deck in Neukölln. Because a number of things have become more expensive, they have also had to increase their admission prices.

His impression is that people are going out less often and are deciding more spontaneously. In addition, people in the neighborhood are now more sensitive to noise. “Many people found the silence very enticing,” he said.

Some in the industry wonder what will happen next. Will club admission have to become much more expensive? Will that exclude people who can no longer afford it? And what happens if Covid infection numbers rise sharply?

If masks become mandatory indoors in October, Schobeß believes that would be bad for the clubs. “Even if we don’t get shut down by the state, we’ll actually have to close down independently ourselves,” she reckons.

Masks take all the joy out of the experience, she says. People have drinks in their hands and are “jumping around and dancing” and then security guards have to tell them “please put your mask on.”

The federal government is considering whether states should be able to make masks mandatory indoors starting in October. Exceptions should be possible, such as at cultural and sporting events, for people who have been tested, recently vaccinated and recently recovered.

In the event that Covid numbers soar, the states could then be allowed to tighten the rules and eliminate all exemptions.

READ ALSO: German court declares techno to be music

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