German steam train halted due to Coronavirus

German steam train halted due to Coronavirus

More money to save the economy, but what can be done when recession knocks?

Economies around the world are battling the impact of Coronavirus. The worse the pandemic gets, the worse the economies perform. Countries around the globe have put financial aid in the fight to support the economy.


One of those countries is Germany, Europe's biggest economy. Due to the virus, Germany is on lockdown, with more than 57,000 infected and 455 dead. Germany will keep the measures against the spread of Coronavirus at least until April 20, according to Chancellor Angela Merkel’s chief of staff.

This outbreak is said to cause "massive economic losses" for the German economy and start an "almost inevitable" recession, according to the German Institute for Economic Research (DIW). Of course, to keep the economy afloat, just last week, the Parliament approved a massive stimulus package worth more than $831 Billion.

This might seem a good idea to prevent financial collapse, but in the long run, an economic crisis is expected. "As a consequence of the Corona pandemic, it seems almost inevitable that the German economy will plunge into a recession — it is unclear what course this will take and how severe it will be," the report from DIW stated.

For this year, the analysts are expecting a drop of at least 0.1%, but the number could go as high as 0.5%. This is the best scenario if businesses manage to rebound quickly in the second half of the year.

Overall, the economic activity expects a drop of 6%, this being the most significant decline since Germany unified. Another scenario involves a 10% drop if the lockdowns last until June. But, if things evolve on a positive note, in 2021 is expected economic growth of 4.9%.

From IMF's point of view, the German economy stopped suddenly due to Coronavirus, and it joined the world into a recession. According to Kristalina Georgieva, the IMF chief, "the 2020 recession and its implications are likely to be worse than the consequences of the global financial crisis of 2008."


Sources: forexlive.com, dw.com, alarabiya.net, politico.eu

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The information presented herein is prepared by CAPEX.com and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance is not a reliable indicator of future results.