The coronavirus is burdening the economy. After bad news from the auto industry, an industry association is now making a bitter forecast.
Investor’s panic that taken the world over the virus corona impacted Canadian stocks (including the best Canadian dividend stocks) as well as the loonie after having a second person tested positive in Toronto. Leaders of the world are suddenly coming together to take necessary measures against Coronavirus. Bankruptcies should be prevented as a result of this sudden outbreak. In order to contain the economic consequences of the Corona epidemic, the leaders of the grand coalition in Germany have agreed to make short-time benefits easier. For example, the social security contributions are to be fully reimbursed by the Federal Employment Agency, as the coalition committee decided on Monday night.
How the coronavirus might affect the global economy
Within the framework of ordinance authorizations, the conditions for receiving short-time work benefits are to be facilitated and benefits are to be expanded. In addition to the reimbursement of social contributions, this includes reducing the quorum of the workforce affected by lost work to up to ten percent, as stated in the declaration of the coalition leaders. So far, the threshold has been at least a third. In addition, short-time work benefits should also be available from temporary workers.
“As a result of the corona crisis, as far as possible no company in Germany should go bankrupt and no job should be lost,” emphasized the leaders of the Union and SPD. They referred to the “proven funding instruments” available to the companies concerned. At the same time, the coalition leaders assured, should the situation worsen, “we want to be able to react quickly and precisely”.
A Bitter Forecast – A Possible Slide Into A Recession
While the Federal Association of German Industry warns clearly of a recession in Germany, the German catering and hotel industry is demanding state aid due to severe business losses as a result of the coronavirus. Many industries had been severely affected by the coronavirus epidemic and something has to be done to save the people and their livelihood.
Given the massive consequences for the economy from the coronavirus, the industry sees the danger of a recession in Germany increasing considerably. “Economic growth is almost at a standstill,” says a quarterly report from the Federal Association of German Industry (BDI). If there is no economic normalization in the countries affected by the corona epidemic in the second quarter, the BDI expects economic output in Germany to decline for the year as a whole.
According to the IMF, the economic downturn is not yet foreseeable
The International Monetary Fund (IMF) is also lowering its forecast for global economic growth this year due to the virus. Growth will be lower in 2020 than in the previous year, said IMF chief Kristalina Georgieva. How much the economy will decline is not yet foreseeable at the moment. In January the IMF had forecast an increase of 3.3 percent for 2020. The IMF plans to provide an updated forecast next month.
The BDI is now calling on the federal government to act. In the coalition, economic policy measures would have to be agreed quickly and, if possible, decided before Easter. A suggestion from the BDI is easier short-time work. “Germany must not slide into a recession with eyesight,” warns the association.
Meanwhile, the US Congress has agreed on a billion-dollar package to fight the coronavirus. Republicans and Democrats decided to fund emergency measures against the epidemic with a total of $ 8.3 billion. For US President Donald Trump, the coronavirus is currently the biggest enemy.
The Coronavirus Epidemic Impacts Global Economy
Bavaria’s Prime Minister and CSU boss Markus Söder expect drastic consequences for the global economy due to the global spread of the coronavirus. “Corona as a global phenomenon could have a similar effect to the financial crisis,” said the 53-year-old to Munich’s Merkur. There is currently no answer to the threat of a recession, “but I’m already worried and vigilant.” Especially for the strongly export-oriented economy – like in Bavaria – the virus is the next big test after the trade dispute between China and the USA and Brexit.