German Economic Institute (IW) said in the “positive scenario”, the coronavirus lockdown would last until end of April. GDP growth of the country in 2020 would be around -5% lower than without the pandemic. Industry could lost around -10%. Loss in private service provider would be similar to the broader economy. But in individual areas such as the hospitality industry, double-digit losses can be expected. In this scenario, rapid recovery will begin in may and the crisis could be over by autumn. The V-shaped response would be that at best, the crisis will be almost as severe as the 2009 financial crisis, but broader.

In the “negative scenario”, lockdown could last until end of June and then catch-up process is less intensive. GDP growth would be lowered by -10% compared to the normal course. Industry would be hit hard by -18% and private service by -11%. A U shape economic activity form would be seen in which the upswing would only start at the beginning of Q3. There would be further downward dynamics if companies collapse in large numbers and confidence of consumers and investors cannot be regained. Such a decline would be “unprecedented” and would “fundamentally question the foundations of our prosperity”.

IW added: “A particular problem is the lack of, or even a total lack of, international coordination of the crisis response. There is no coordination on border closings, common solutions and strengthening foreign trade in order to increase flexibility on the supply side. Economic self-sufficiency and foreclosure are not the necessary conditions for national civil protection, but complicate adaptation and hinder recovery. As in 2008, the G20 must develop a common understanding of the crisis and define an action framework. The euro area must assume shared fiscal responsibility to prevent disintegration. To ease the burden on the ECB, corona joint bonds must therefore be examined.

Germany Ifo export expectations dropped sharply from -1.1 to -19.8 in March. That is the sharpest decline since reunification, and the lowest level since May 2009.

Ifo President Clemens Fuest warned, “The corona pandemic is slowing global trade. Cross-border logistics is becoming more difficult. Germany as an export nation is particularly affected.”

Export expectation dropped in almost all industrial sectors, with auto industry particular hard hit. Outlook is also “bleak” in mechanical engineering, textile and clothing. A “comparatively moderate decline” was see among electrical equipment and chemicals.

Full release here.

Germany Gfk consumer climate for April dropped to 2.7, down from March’s 8.3. The index is at its lowest level since May 2009, when consumer climate was at 2.6 during the global financial crisis. Economic expectations dropped by -20.4pts to -19.2, lowest since August 2012. Income expectations dropped -13.4 pts to 27.8, lowest in 7 years.

“In light of the current development, we are withdrawing our consumer forecast of one percent growth for 2020. Retailers, manufacturers and service providers must prepare for a recession,” explains Rolf Bürkl, GfK Consumer Expert. “How severe this recession will be will ultimately depend on when the economy finds its way back to normality. A reliable forecast regarding consumption can only be made once we can predict how long the protective measures to combat corona will remain in place.”

Full release here.

Germany Ifo Business Climate collapsed from 96.0 to 86.1 in March. That’s the steepest decline ever recorded since German reunification. It’s also the lowest value since July 2009. Current Situation index dropped from 99.0 to 93.0. Expectations Index dropped from 93.1 to 79.7.

By sector, manufacturing index dropped from -1.6 to -18.2. It’s the lowest since August 2009. Service index dropped from 17.4 to -7.6, biggest decline on record since 2005. Trade index dropped form 1.0 to -21.4. Construction index dropped from 12.9 to 5.0.

Ifo economist Klaus Wohlrabe said the economy could contract by between -5% and -20% this year depending on the length of the shutdown caused by the pandemic. He expected there to be a severe recession that would last for at least two quarters.

Full release here.