Economists see an upswing in danger due to Corona

The Robert Koch Institute reports more than 14,000 new corona infections within one day. Economics Minister Altmaier calls the situation dramatic and warns of a new nationwide lockdown.

Masks are compulsory on Frankfurt's Zeil shopping street.

AIn view of the rapidly increasing number of new corona infections in Germany, there is growing concern among economists about the possible economic consequences of a second wave of pandemics. “The economic upswing should largely come to a standstill by spring,” said the chief economist of the state-owned KfW banking group, Fritzi Köhler-Geib. “As a result, unemployment should stagnate in the coming months or – if things go bad – increase significantly.”

Federal Minister of Economics Peter Altmaier called the infection situation “dramatic”, but warned again against a shutdown of the economy. “There mustn’t be a new nationwide lockdown, and I don’t think it is necessary,” said the CDU politician to the newspapers of the Funke media group.

Finance Minister Olaf Scholz considers Germany to be financially well equipped. “The corona pandemic is far from over, and as expected, we are now seeing a significant increase in the number of infections in autumn,” said the SPD politician of the “Augsburger Allgemeine”. “The situation is serious and we take it seriously.”

Highest number of new infections since the beginning of the pandemic

According to the Robert Koch Institute, the health authorities in Germany reported 14,714 new corona infections on Saturday morning, more than ever since the pandemic began. However, since there were occasional data gaps in the transmission of infection numbers on Thursday, the most recent number of new infections could include late reports.

From the point of view of KfW chief economist Köhler-Geib, the employment risks remain high, especially in customer-oriented economic sectors. The autumn and winter months would be another endurance test, especially for the hotel and restaurant industry as well as parts of the retail trade and the cultural sector. A view that Marc Schattenberg, an economist at Deutsche Bank, shares: “The situation is stressful, especially for the service sector.”

For the fourth quarter there are downside risks that could drag on into the new year, said Schattenberg. At the Allianz Group, too, it was said that the risks outweighed the downside. Unfortunately, things are likely to get more uncomfortable for the German economy as early as autumn, said Allianz expert Katharina Utermöhl. The expiry of supportive catch-up effects will make it unmistakably clear that the current economic recovery will not be a sure-fire success.

Altmaier’s growth forecast is subject to change

Altmaier emphasized that “the positive economic assumptions that we have made for 2021 – that is, substantial growth in the order of at least 4 percent – are of course subject to the proviso that we succeed in reducing the high number of infections again”. For 2020, however, it can be assumed that the development will largely occur as forecast. For the coming year, the federal government had predicted economic growth of 4.4 percent, for the current year an economic slump of 5.8 percent.

The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, fears that the risks of a second wave will be underestimated. We urgently need to make the citizens aware of the seriousness of the situation and to make them much more cautious. “A strong and sustained increase in infections could hit the economy just as hard as the first wave,” said Fratzscher of the “Augsburger Allgemeine”: “The economy is much less resilient today than it was in March and April.”

In the opinion of FDP parliamentary group vice-parliamentarian Christian Dürr, it shows how ineffective the coalition’s economic stimulus package was. The VAT reduction is expensive and fizzles out with no noticeable success: “We now need a signal for permanent relief as soon as possible, so that companies can operate and invest with as much confidence as possible.”