Berlin (dpa) – In the event of a prolonged partial lockdown in the Crown crisis, the German economy threatens a new setback from the perspective of economists.
For the last quarter, they expect a drop in economic output again, but less than in the spring. The restrictions that have been in place since early November are already causing serious losses, according to the retail and restaurant industries, for example. In the case of longer restrictions, the companies affected also demand an extension of the aid.
This Wednesday, Chancellor Angela Merkel (CDU) is discussing the next steps in the crown pandemic with the prime ministers of the federal states. An extension of the partial blockade is evident, which has been in force since the beginning of November and was initially limited to the end of the month. An extension is proposed until December 20. State aid for affected companies could be expanded accordingly, he said.
DIW President Marcel Fratzscher emphasized that containing the pandemic must continue to have the highest priority, also with an eye to the economy. The greatest risk for economic recovery is a wave of long-term contagion, which generates even more uncertainty for companies, the self-employed and consumers: “In the short term, we have to act consistently to protect the economy in the medium term.” The longer politicians delay the necessary measures, the more difficult it will be to stop the wave of infections and the greater the economic damage.
Michael Hüther of the Institut der deutschen Wirtschaft (IW) called for the November aid to be extended in the event of longer restrictions. “Basically, like replacing 75 percent of the previous year’s monthly billing, solutions have been chosen that can only be justified in the short term and that work.” For the economists of “Deutsche Bank Research”, the aid should remain “strictly oriented towards the points of necessity, precision and adequacy, since the fiscal resources are finite and the State cannot offer a comprehensive insurance”.
Should the partial lockdown continue, Holger Schmieding, chief economist at Berenberg Bank, will increase the probability of a slight decline in German gross domestic product in the fourth quarter. “That should be very soft compared to the hiatus in March and April,” said Schmieding of the German press agency. Schools and stores are not closed, manufacturing is doing well, order books are fuller than usual. As soon as restrictions are relaxed, the economy will catch up with the possible setback.
In the opinion of ING Bank’s Carsten Brzeski, a further decline in economic output is inevitable. Services have weakened since September. The blockade worsened this trend. The lack of perspective on how long the measures will take will put pressure on consumer and business confidence. The only positive unknowns at this time are industry and exports, which entered strongly in the fourth quarter.
In their report in early November, the “economic savants” have already prepared for a longer lockdown. “The Council of Experts has already taken into account the November closing light in its forecast, and also assumed that the restrictions will be extended through the winter,” said the head of the advisory body, Lars Feld, the “Handelsblatt”. Their impression is that the federal and state governments stick to the basic approach: keep working, but restrict contacts in your spare time. “This is strong protection for the German economy, as shown now in November, for example, in surveys of companies such as the Purchasing Managers Index.”
The mood among eurozone purchasing managers deteriorated significantly in November. The prestigious purchasing managers index of the British institute IHS Markit fell 4.9 points to 45.1 points. The sentiment indicator is well below the growth threshold of 50 points. Services are mainly affected by restrictions on public life. In industrial companies, however, the mood has only slightly deteriorated. Sentiment data still suggests growth in the manufacturing sector.
According to a survey by the retail association HDE, the number of customers in city centers in the third week of November was 40 percent lower than the previous year. Sales were nearly a third below the previous year’s figure. “If politicians do not promptly intervene with aid programs, we will soon pass the tipping point from which many distributors will no longer be able to save themselves,” said Stefan Genth, CEO of HDE. He asked politicians to open up November aid to retailers as well. Also, bridging aids should be adjusted.
If politicians decide to close hotels and restaurants more, there must also be a commitment to more help, according to the restaurant industry. “The November aid has to become winter aid,” Ingrid Hartges, executive director of the Federal Dehoga Association, told the “Rheinische Post” (Monday). The fitness industry also complains about the lack of prospects and warns of bankruptcies if the studios are not allowed to reopen soon.
In the spring, the German economy collapsed 9.8 percent with the first major lockdown. With unexpectedly strong third-quarter growth of 8.2 percent compared to the previous quarter, Europe’s largest economy made up for some of the crown-related decline.