By Andrea Schuessler
The euro area will slide into recession in the coming months, according to the Eurozone Economic Outlook released by the Munich-based Ifo Institute and the KOF Swiss Economic Institute in Zurich released April 9.
Economic output would be likely to have shrunk by 2.3 percent in the first quarter of 2020 and would then shrink by 10.5 percent in the second, the researchers said.
For the third quarter of 2020, there might be 8.7 percent growth, always against the previous quarter, according to the economists.
"The corona pandemic is an unprecedented shock for the global economy," the researchers said April 9.
“These economic forecasts are fraught with great uncertainty. The chance that the pandemic will weaken earlier than expected is slim”, the economists said.
"A resurgence of the European debt crisis on a large scale therefore poses a not negligible risk to the forecast,” they added.
Fear that Corona Crisis will become tougher for Germany than Global Financial Crisis, Head of German Institute for Economic Research Fratzscher Says
"How deep the crisis will be depends on how quickly the virus can be fought," Marcel Fratzscher, Director of the German Institute for Economic Research (DIW Berlin) told members of Germany’s Foreign Press Club in an online meeting April 2.
"The more companies go bankrupt, the more difficult the economic recovery will be," he said.
"I fear that, from an economic point of view, this crisis will become tougher for Germany than the global financial crisis. At that time, Germany got through quite well, recovered relatively quickly, had a sharp drop in late 2008 and early 2009 by 6, 7, 8 percentage points, but then came back very strongly in late 2009/10,” Fratzscher said. Numbers would be hard to predict and highly depend on the development of the pandemic, he said.
In 2021, the economy could significantly recover if the world economy would be recovering and the virus would not come back, he said. For that forecast, economic activity and policy would have to resume in the second half of 2020, and countries such as Italy should not get into trouble and trigger a financial crisis, Fratzscher said.
Duplication Rate of the Infections Critical to Relax Lockdown Measures, Montgomery says
With 50,000 beds in intensive care with around 30,000 ventilators and the country’s cautious strategy including massive testing facilities to fight the virus, Germany would be well prepared for the pandemic, Frank Montgomery, President of the World Medical Association (WMA), told foreign journalists in an online talk April 2.
"I would like to know from politics a scientific date, not time, but a quantity when you can allow more contacts again. For me this is the duplication rate of the infections again. We will not be able to prevent the entire population from being infected in the long run, we will achieve this sometime by getting everyone infected or by having a vaccine and vaccinating people, but at some point we will reach herd immunity and only if we do so we can sit back and relax and say that this disease has been overcome," Montgomery said.
We need to stay within capacity limits of hospitals in the coming months, he said.