Coronavirus Impact On Europe: German Economy Could Decline 4.2% In 2020 Amid Pandemic

Multiple German research institutes project that Germany’s economy could decline 4.2% this year, as the coronavirus has forced the country to shut down non-essential businesses, Reuters reported Tuesday.

Economy Minister Peter Altmaier believes that Germany’s GDP could contract even farther than it did in 2009 amid the financial crisis, a 5.7% drop that year.

As a stimulus measure, Germany is rolling out a rescue package of 750 billion euros ($825 billion) to shore up the economy. The financial aid program is one of the biggest in the world and will spur lending to businesses, along with providing support to workers who have been furloughed or laid off.

Germany is reportedly preparing a plan to ease its current shutdown measures, allowing a gradual return to normal daily life after the current order expires on April 19. Germany would begin by allowing stores to reopen, along with schools in certain regions of the country. Large social gatherings would still be banned, with it being compulsory to wear a mask on public transportation.

Prior to the coronavirus, Germany was already facing economic challenges due to ongoing trade tensions and the impact of the United Kingdom leaving the European Union.

One of the major strengths of the German economy is well-made exports, most notably automakers such as BMW, Audi and Volkswagen. Yet these firms have been hurt financially in China, a major market, due to the trade war between Washington and Beijing.

German companies were also worried about the prospect of the U.K. leaving the EU without a deal, with the two countries having a close trade relationship. A major German research institute in February 2019 projected that Germany could lose 100,000 jobs in a hard Brexit.

As of Tuesday at 12:10 p.m. ET, Germany has 104,199 coronavirus cases with the death toll at 1,842.