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German economy should recover from coronavirus pandemic ‘by end of next year or 2022’

Germany will need to take on yet more debt in 2021 to mitigate the impact of the coronavirus on the economy, Finance Minister Olaf Scholz said Friday.

Published: 21 August 2020 09:09 CEST

German economy should recover from coronavirus pandemic 'by end of next year or 2022'

Archive photo shows a shop with the sign 'we are closing down' in Düsseldorf, North Rhine-Westphalia. The pandemic has hit businesses hard.Photo: DPA

Scholz, the vice Chancellor of Germany, also said he was expecting the economy to have recovered from the virus shock and returned to pre-crisis levels “by the end of next year or the beginning of 2022”.

“Next year we will continue to be forced to suspend the debt rule and spend considerable funds to protect the health of citizens and stabilise the economy,” Scholz said in an interview with the Funke media group, referring to Germany's cherished policy of keeping a balanced budget.

Scholz already plans to borrow around €218 billion ($258 billion) this year to help pay for a huge rescue package to steer the country through the coronavirus-induced downturn, blasting through a financial crisis-era “debt brake” written into the constitution.

The government has pledged over a trillion euros in aid to shield companies and citizens in Europe's top economy from the pandemic fallout, including through loans, grants and subsidised shorter-hours programmes.

READ ALSO: Is Germany doing enough to ensure small businesses survive the pandemic?

Scholz nominated in race to succeed Merkel

Germany's centre-left Social Democrats (SPD) have nominated Scholz to lead them in the race to succeed Angela Merkel as Chancellor in next year's federal election.

Buoyed by his handling of the coronavirus pandemic, Scholz is now the SPD's most popular politician, according to national polls.

Europe's top economy was hit less hard by the coronavirus than its neighbours, but still saw its GDP fall by 10.1 percent in the second quarter after a decline of two percent in the first.

Germany's previous record for a quarterly GDP drop was 4.7 percent in the first quarter of 2009, after the financial crisis of 2008.

READ ALSO: What you need to know about Germany's new coronavirus aid

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Could there be a new wave of Covid-19 in Germany this autumn?

More people donning face masks in supermarkets, friends cancelling plans last minute due to getting sick with Covid-19. We might have seen some of those familiar reminders recently that the coronavirus is still around, but could there really be a resurgence of the virus like we experienced during the pandemic years?

According to virologists, the answer seems to be ‘maybe’: since July, the number of people newly infected with Covid-19 has been slowly rising from a very low level.

According to the Robert Koch Institute (RKI), nine people per 100,000 inhabitants became newly infected in Germany last week. A year ago, there were only around 270 reported cases.

Various Corona variants are currently on the loose in the country. According to the RKI, the EG.5 (also called Eris) and XBB.1.16 lines were each detected in the week ending September 3rd with a share of just under 23 percent.

The highly mutated variant BA.2.86 (Pirola), which is currently under observation by the World Health Organisation (WHO), also arrived in the country this week, according to RKI.

High number of unreported case

The RKI epidemiologists also warned about a high number of unreported cases since hardly any testing is done. They pointed out that almost half of all registered sewage treatment plants report an increasing viral load in wastewater tests.

The number of hospital admissions has also increased slightly, but are still a far cry from the occupation rate amid the pandemic. Last week it was two per 100,000 inhabitants. In the intensive care units, only 1.2 percent of all beds are occupied by Covid-19 patients.

Still, a good three-quarters (76.4 percent) of people in Germany have been vaccinated at least twice and thus have basic immunity, reported RKI.

Since Monday, doctors’ offices have been vaccinating with the adapted vaccine from Biontech/Pfizer, available to anyone over 12 years old, with a vaccine for small children set to be released the following week and one for those between 5 and 11 to come out October 2nd.

But Health Minister Karl Lauterbach has so far only recommended that people over 60 and those with pre-existing conditions get vaccinated.

READ ALSO: EXPLAINED: Who should get a Covid jab this autumn in Germany?

“The pandemic is over, the virus remains,” he said. “We cannot predict the course of coming waves of corona, but it is clear that older people and people with pre-existing conditions remain at higher risk of becoming severely ill from Covid-19”

The RKI also recommended that people with a cold voluntarily wear a mask. Anyone exhibiting cough, cold, sore throat or other symptoms of a respiratory illness should voluntarily stay at home for three to five days and take regular corona self-tests.

However, further measures such as contact restrictions are not necessary, he said.

One of many diseases

As of this autumn, Covid-19 could be one of many respiratory diseases. As with influenza, there are no longer absolute infection figures for coronavirus.

Saarbrücken pharmacist Thorsten Lehr told German broadcaster ZDF that self-protection through vaccinations, wearing a mask and getting tested when symptoms appear are prerequisites for surviving the Covid autumn well.

Only a new, more aggressive mutation could completely turn the game around, he added.

On April 7th of this year, Germany removed the last of its over two-year long coronavirus restrictions, including mask-wearing in some public places.

READ ALSO: German doctors recommend Covid-19 self-tests amid new variant

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