Coronavirus: German recession to last until mid 2020

Germany has been plunged into a recession set to last until the middle of the year, the Economy Ministry said Wednesday, as the government held key talks on whether to end crippling curbs imposed to fight the coronavirus pandemic.

Coronavirus: German recession to last until mid 2020
People waiting outside a Deutsche Bank branch in Frankfurt. Photo: DPA

With schools and most shops closed, travel halted and millions now working from home, Europe's biggest economy has been severely hit by the Covid-19 crisis.

As calls grow from industry for restrictions to public life to be gradually eased, Chancellor Angela Merkel will hold talks this afternoon with state premiers on whether to extend the curbs, which are currently due to run until April 19th.

“Falling global demand, interruption of supply chains, changes in consumers' behaviour and uncertainty among investors” had all made themselves felt in the export giant, the Economy Ministry said.

The economic blow from the virus fell just as Germany was beginning to recover from a 2019 marked by the impact of trade wars and Brexit fears.

Industry in particular had seen rises in new orders and activity as 2020 got underway, the ministry noted.

But “given the massive demand and supply shock at home and abroad from the coronavirus pandemic, economic developments reversed course” for manufacturers, it said.

Inching recovery

Meetings like Wednesday's between Merkel's cabinet and state governments aim at bringing measures into line across Germany's 16 states, with some regional capitals backing toughness and others keen to gradually reopen society.

Chafing at the social distancing rules, some Germans have pointed to neighbouring Austria, where Chancellor Sebastian Kurz allowed many smaller businesses to reopen from Tuesday – but with conditions such as wearing masks and maintaining a safe distance from others.

“Even if the first protective measures can be loosened somewhat (after April), growth will remain very muted and only revive bit by bit,” the Economy Ministry forecast.

To cushion some of the blow, the government has passed a rescue package totalling €1.1 trillion ($1.2 trillion), ranging from guarantees for bank lending to business to a state fund that could buy up stakes in stricken companies if necessary.

READ ALSO: What's the latest on coronavirus in Germany and what do I need to know?

The federal government also eased access to a scheme that tops up workers' wages if their employer slashes hours, known as Kurzarbeit.

The BA federal labour agency said some 725,000 companies had applied for the assistance, adding that the number of workers affected will likely be “significantly” above the 1.4 million helped in the 2008-2009 financial crisis.

Berlin estimates that around 2.1 million workers will have to fall back on the support.

READ ALSO: Germany gives green light to €1.1 trillion coronavirus aid package

Meanwhile eyes are on a European Union heads of government video conference on April 23rd to lay the groundwork for recovery across the bloc.

Finance ministers from the eurozone single currency area agreed €500 billion of immediate support last week, but economists and politicians warn more will be needed, especially for the hardest-hit southern nations like Spain and Italy.

Predicting a contraction of up to 5.4 percent for Germany this year, some among Berlin's council of economic advisers (SVR) warned in March of consequences if a European recovery programme falls short.

“It's not much good if one country, hopefully Germany, comes through the crisis relatively well, but around us the crisis is not yet over, then we won't be able to ramp up production,” SVR member Achim Trueger said at the time.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Pandemic in Germany unlikely to end this year, says top virologist

High profile German virologist Christian Drosten believes Germany will see a severe spike in Covid infections after summer, and that the pandemic will not become endemic this year.

Pandemic in Germany unlikely to end this year, says top virologist

Drosten previously said that Germany would probably be able to declare the end of the pandemic this year.

But in an interview with Spiegel, Drosten said he had reevaluated his opinion. 

“When the Alpha variant came, it was very surprising for me. When Delta appeared I was sceptical at first, then with Omicron we had to reorient ourselves again. And since January there have already been new Omicron subtypes.

“So I would actually like to correct myself: I no longer believe that by the end of the year we will have the impression that the pandemic is over.”

READ ALSO: End is in sight for pandemic in Germany, says virologist 

Drosten also said that Germany will not see a largely Covid-free summer, which has been the case in previous years, and a further increase in infections in autumn. 

“We are actually already seeing an exponential increase in case numbers again,” Drosten said.

“The BA.5 variant (of Omicron) is simply very transmissible, and people are losing their transmission protection from the last vaccination at the same time.”

In other countries, he said, when the number of cases become high, hospitalisation and death rates also rise again. “Unfortunately, that will also be the case here,” said Drosten, but added: “Overall, however, far fewer people will become seriously ill and die than in 2021.”

Drosten said he expected many more infections from September.

“I hope that the school holidays will dampen the increase in cases somewhat. But from September, I fear we will have very high case numbers,” the head of the virology department at Berlin’s Charité hospital told Spiegel.

READ ALSO: German Health Minister lays out autumn Covid plan

Virologist Christian Drosten at a Covid press conference in 2021.

Virologist Christian Drosten at a Covid press conference in 2021. Photo: picture alliance/dpa | Kay Nietfeld

If the government does not take any action, he predicted there would be a lot of sick leave across all industries. “That will become a real problem,” he said.

Drosten said he did not expect overcrowded intensive care units in Germany.

But the new BA.5 sub-variant, which is becoming dominant in Germany, may affect people more strongly. 

“The wheel is turning more towards disease again,” said Drosten. It is not true that a virus automatically becomes more and more harmless in the course of evolution. “That makes me even more worried about the autumn,” he said.

Drosten recommends wearing masks indoors during the colder months, saying it is “the least painful” measure.

If, in addition, “up to 40 million people could be immunised or given a booster vaccination” before winter, for example by urgently calling for company vaccinations, that would “really make a difference”, Drosten said.

In the long term, he said it’s inevitable that people will become infected with coronavirus.

He said the population immunity due to vaccinations and infections will at some point be so strong that the virus will become less important. “Then we will be in an endemic state,” said Drosten. In the worst case, however, this could take “several more winters”.

However, Drosten warned against people trying to deliberately infect themselves with Covid, saying getting the infection in summer doesn’t mean people will be protected in winter. 

Drosten himself said he has not yet contracted Covid-19.

“So far, I guess I’ve just been lucky,” he said. “I rarely put myself in risky situations, but I’m not overly cautious either.”

‘Pandemic depends on behaviour’

According to the Robert Koch Institute (RKI)’s latest weekly report, more outbreaks are occurring in care homes, and the number of patients in intensive care units is slightly rising as infections go up. 

The institute said there had been a 23 percent increase in the 7-day incidence compared to the previous week. On Friday the 7-day incidence stood at 618.2 infections per 100,000 people. There were 108,190 infections within the latest 24 hour period and 90 deaths. 

“The further course of the pandemic depends not only on the occurrence of new virus variants and the uptake of vaccinations on offer, it also depends to a large extent on the behaviour of the population,” said the RKI.

According to the DIVI intensive care register, the number of Covid-19 patients in ICUs had increased to 810 on Thursday this week, from about 600 at the beginning of the month.

However, that number is still low compared to previous Covid peaks when thousands of people were in intensive care in Germany.