Germany ‘can and will’ avoid second coronavirus lockdown as economy rebounds

Germany 'can and will' avoid second coronavirus lockdown as economy rebounds
Economy minister Peter Altmeier (CDU) holds a graph projecting econonic growth in Germany in 2020 and 2021. Photo: DPA
Germany is in a V-shaped economic recovery as it bounces back more strongly than expected from the effects of the first phase of the coronavirus pandemic, the economy minister said Tuesday.

German GDP is expected to fall 5.8 percent in 2020, a narrower recession
than the 6.3 percent drop projected earlier, Peter Altmaier said, signalling
that the country is emerging from the worst of the crisis.

Altmaier said Germany “can and will” avoid lockdowns like Germans lived
through in March and April.

“Rising infection rates will be countered by targeted and regionally limited measures, so that the economic recovery can continue to develop gradually in the coming months,” he said.

READ ALSO: German economy should recover from coronavirus pandemic 'by end of next year or 2022'

The country, which has been more resistent to the pandemic than many of its
neighbours, reported nearly 1,250 new cases of COVID-19 per day on average
over the last week, compared with an average of less than 500 in July and
August, and is starting to tighten restrictions again.

Last week, the government announced a minimum fine of €50 for
anyone caught without a face mask in places where wearing one is compulsory, a
ban on large events until the end of the year and new quarantine rules for
travellers returning from regions with high case rates.

Chancellor Angela Merkel, a former scientist, has won plaudits and seen her
approval ratings soar for her handling of the virus, but last week said coping
with the outbreak will become more challenging in the coming months.

More than 9,000 people have died with COVID-19 in Germany since the first
detected case in January, a lower rate than other major countries in Europe
that lived through tougher lockdowns.

It tallies with Germany's considerably better economic outlook.

France, for example, is expected to see its economy shrink 10.6 percent by the end of 2020, Spain 10.9 percent and Italy 11.2 percent, according to EU statistics.

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Road to recovery'

Altmaier said Europe's largest economy was experiencing “an unfortunately strong slump but then an unexpectedly fast recovery”.

Before a press conference, the minister even showed off a printed V-shaped chart for assembled photographers to highlight the bounce back.

The German economy slumped 9.7 percent in the second quarter of 2020, the
“sharpest decline since quarterly GDP calculations for Germany began in 1970,”
the federal statistics agency Destatis said previously.

However, the “low point of the recession” passed in May, according to the economy ministry.

Recent surveys have already shown an improvement in business sentiment in the country.

Meanwhile enemployment was stable for the third-straight month, at 6.4 percent in July, the German labour agency said in statistics published Tuesday.

Last week, the Ifo Institute said its monthly barometer of business confidence showed that companies were growing more and more positive about the
economic situation, after the index plummeted to record lows in April.

“The German economy is on the road to recovery,” Ifo President Clemens Fuest said of the data.

German Purchasing Managers' indices, another measure, have also shown
expansionary trends since July.

The German economy is expected to grow 4.4 percent in 2021, although
pre-crisis GDP levels will not be seen again until 2022, the economy ministry
said.

READ ALSO: Is Germany heading for a second lockdown amid rise in coronavirus cases?


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