Extended partial lockdown continues to slow down the economy

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Berlin (dpa) - In the event of an extended partial lockdown in the Corona crisis, the German economy threatens a new setback from the perspective of economists.

For the final quarter they then expect a decline in economic output again, but less strongly than in spring.

The restrictions that have been in force since the beginning of November are already causing severe losses, according to the retail and catering industries, for example.

In the case of longer restrictions, the affected companies also demand an expansion of the aid.

This Wednesday, Chancellor Angela Merkel (CDU) is discussing the next steps in the corona pandemic with the Prime Ministers of the federal states.

An extension of the partial lockdown, which has been in force since the beginning of November and was initially limited to the end of the month, is becoming apparent.

An extension to December 20th is proposed.

The state aid for affected companies could then be extended accordingly, it said.

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DIW President Marcel Fratzscher emphasized that containment of the pandemic must continue to have top priority, also with a view to the economy.

The greatest risk to the economic recovery is a long-lasting wave of infections, which brings even more uncertainty for companies, self-employed people and consumers: "In the short term, we have to act consistently in order to protect the economy in the medium term."

The longer politicians postpone necessary measures, the more difficult it will be to stop the wave of infections and the greater the economic damage.

Michael Hüther from the Institut der deutschen Wirtschaft (IW) pleaded for the November aid to be extended in the event of longer restrictions.

"Basically - like the replacement of 75 percent of the previous year's monthly turnover - solutions have been chosen that can only be justified in the short term and that work."

For economists at "Deutsche Bank Research", the aid should continue to be "strictly geared towards the points of necessity, accuracy and appropriateness, since fiscal resources are finite and the state cannot offer fully comprehensive insurance".

Should the partial lockdown be extended, Holger Schmieding, chief economist at Berenberg Bank, will increase the likelihood of a slight decline in German gross domestic product in the fourth quarter.

"That should be very mild compared to the break in March and April," said Schmieding of the German press agency.

Schools and shops are not closed, the manufacturing industry is doing well, the order books are fuller than usual.

As soon as the restrictions are relaxed, the economy will catch up with the possible setback.

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In the opinion of Carsten Brzeski from ING Bank, a renewed decline in economic output is inevitable.

Services have been weakening since September.

The lockdown made this trend worse.

The lack of perspective on how long measures will take will put a strain on consumer and business confidence.

The only positive unknowns at the moment are industry and exports, which went strongly into the fourth quarter.

In their report from the beginning of November, the “economic wise men” have already prepared for a longer lockdown.

"The Expert Council has already taken into account the lockdown light from November in its forecast, and also assumed that restrictions will drag on over the winter," said the head of the advisory committee, Lars Feld, the "Handelsblatt".

His impression is that the federal and state governments are sticking to the basic approach: continue working, but restrict contacts in their free time.

"This is a strong protection for the German economy, as is now shown in November, for example in company surveys such as the purchasing managers' index."

The mood among purchasing managers in the eurozone deteriorated significantly in November.

The highly regarded purchasing manager index from the British institute IHS Markit fell by 4.9 points to 45.1 points.

The sentiment indicator is well below the growth threshold of 50 points.

Services are primarily affected by the restrictions on public life.

In industrial companies, however, the mood has only deteriorated slightly.

The sentiment data still suggest growth in the manufacturing sector.

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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 below the previous year's level.

Sales were almost a third below the previous year's figure.

"If politicians do not intervene promptly with aid programs, then we will soon pass the tipping point from which many dealers can no longer be saved," said HDE General Manager Stefan Genth.

He called on politicians to open the November aid to retailers as well.

In addition, the bridging aids would have to be adjusted.

If politicians decide to close hotels and restaurants further, there must also be a commitment to further help, according to the catering industry.

"The November aid must become winter aid," said Ingrid Hartges, general manager of the Dehoga federal association, the "Rheinische Post" (Monday).

The fitness industry also complains about a lack of prospects and warns of bankruptcies if studios are not allowed to reopen soon.

In the spring, the German economy collapsed by 9.8 percent with the first major lockdown.

With unexpectedly strong growth in the third quarter of 8.2 percent compared to the previous quarter, Europe's largest economy then made up for part of the corona-related slump.

© dpa-infocom, dpa: 201123-99-434349 / 3