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HEALTH

How coronavirus has pushed Germany into a recession

German output shrank by 2.2 percent in the first quarter of 2020, official data showed Friday, as the coronavirus pandemic tipped Europe's top economy into a recession.

How coronavirus has pushed Germany into a recession
The sun sets in April in Hamburg's port behind raised container gantry cranes that normally unload ships. Photo: DPA

The quarter-on-quarter contraction is “the worst since the financial crisis” in 2009, federal statistics office Destatis said.

The agency also revised its gross domestic product (GDP) figure for the final quarter of 2019 from zero growth to a contraction of 0.1 percent, meaning Germany has now experienced two consecutive quarters of contraction — the technical definition of a recession.

German Economy Minister Peter Altmaier last month warned that the country was facing “the worst recession” in its post-war history as the pandemic batters the global economy.

READ ALSO: Germany braces for 'worst recession' in post-war history

Like other European countries, Germany closed factories, shops and restaurants forced many workers to stay at home to curb the outbreak from mid-March.

Export-reliant Germany is also hard hit as international trade and travel are curtailed.

“Private consumption, exports and investments in equipment shrank considerably as a result,” the German economy ministry said in a statement.

The second quarter is likely to show an even bigger slump before a recovery gets under way, it added.

State consumption and the construction industry were the only growth drivers in the first three months of the year.

READ ALSO: Which German industries have been hardest hit by the coronavirus?

“Two weeks of lockdown as well as supply chain disruptions on the back of lockdown measures elsewhere brought the German economy to its knees,” said ING-Diba economist Carsten Brzeski.

Some experts have predicted that the German economy could contract by around 10 percent between April and June.

Recovery hopes

But there are glimmers of hope on the horizon, with many experts saying Germany is well positioned to weather the storm.

The country's first quarter slump is smaller than steep GDP plunges seen in France and Spain, two of the countries hit hardest by the virus in Europe.

Berlin predicts the German economy will bounce back in 2021 and grow by 5.2 percent as the virus impact wanes and businesses reopen.

The country began easing lockdown restrictions in early May, allowing most shops to open again while restaurants and tourism also took their first tentative steps.

Factories too are restarting their production lines.

“The timing of the lifting of the lockdown measures as well as the huge fiscal support by the German government… support the view that the German economy could leave the crisis earlier and stronger than most other countries,” Brzeski said.

To help the country through the COVID-19 crisis, Chancellor Angela Merkel's government has ditched its cherished policy of maintaining a balanced budget.

It has launched an ambitious rescue package worth €1.1 trillion that includes state-backed loan guarantees, cash injections and schemes to put workers on reduced hours to avoid layoffs.

READ ALSO: Bundestag approves historic coronavirus rescue package

Several big-name firms such as sportswear maker Adidas, Condor airline and travel firm TUI have already received hundreds of millions of euros in government-backed loans, while Lufthansa is still negotiating a potential bailout.

But the economy will only rebound if Germany's biggest trading partners are also doing well, warned Jens-Oliver Niklash, an analyst for LBBW bank.

In a sign of more difficult times ahead, carmaker Volkswagen said Wednesday that it would suspend production again on some lines that had only just reopened. The demand for cars is simply not there, it said.

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COVID-19

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. 

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