Altmaier presents the economic forecast: Does a partial blockage infect the entire economy? – Economics

When the global economy stalled in the spring, the response on the stock exchanges did not take long. From February 19 to March 19, Dax fell from nearly 13,800 to about 8,600 points – more than a third of market capital collapsed in one month. Now a second, though different, lock is needed.

How dramatic will the consequences be this time? Will partial blockades affect only directly affected sectors, or will it affect the whole economy?

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In any case, German industry expects significant consequences for the economy. “The resolutions will have a serious impact on economic activity and consumer sentiment in November,” the president of the Federation of German Industry Dieter Kempf said in Berlin on Thursday. “Even if total exclusion is correctly ruled out, the measure dampens the temporary economic recovery.”

Kempf describes the serious cuts in public life that were decided the day before by federal and state governments as “very painful,” but also understands the measures: “Politicians are recognizable because economic activity is largely up and running and public institutions are open hold. “Without intervention,” there would soon be much worse health and economic consequences. “

Retail is considered a disadvantage

Like Kempf, president of the Federal Association of German Volksbank and Raiffeisenbank (BVR), Marija Kolaková: The measure “has hit the German economy hard, but seems inevitable given the sharp rise in infections.”

Retailers were dissatisfied. Stores may remain open, but they must meet more stringent requirements and, due to the tense situation, fear the indirect consequences of losing sales. The German Trade Association (HDE) therefore calls on the federal government to include retailers in the city center who have been severely damaged by the partial blockade in the planned new emergency aid program.

HDE President Josef Sanktjohanser warns in letters to Federal Finance Minister Olaf Scholz (SPD) and Federal Economy Minister Peter Altmaier (CDU) that otherwise many urban traders would not survive and “as a result, all city centers would be dragged into the abyss.” The large-scale closure of public life that is necessary to deal with a pandemic is tantamount to “de facto closure” for many retailers in the city center.

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In particular, the financial reserves of many textile retailers are now exhausted. According to the industry association, the emergency aid program should include all dealers who directly or indirectly suffer a loss of 70 percent of sales due to a partial blockage in November.

I hope it will be returned to you

The sectors, which have now been forced to close after Wednesday’s resolutions, look tense for another four weeks. “Bitter” is the closure of restaurants and a ban on all tourist overnight stays, says Ingrid Hartges, CEO of the Dehoga Hotel and Restaurant Association. “Many companies have their backs to the wall, despair is growing.” The HDF Cinema Association warned that the new measures would “cost more homes to exist.”

Ingrid Hartges, CEO of Dehoga, welcomes new financial assistance from DEHOGA Bundesverband / Svea Pietschmann

Many of those affected also hope for promised compensation for the sale. According to the federal government, small companies should receive up to 75 percent of turnover from the previous year from the federal government in November, larger companies with 50 or more employees up to 70 percent. However, small details are still known.

“That’s the least”

“The promised emergency economic aid to compensate the companies affected for their financial losses in November is to be welcomed,” says Hartges, who called for the aid to be “quickly and unbureaucratically made available to all gastronomy, hospitality and hospitality companies”.

For Christine Berg, a member of the HDF board of directors, this is “the least that politics should now give to those sectors of the economy from which they are again deprived of a business base at least strong support in terms of sales losses.” However, they still do not believe in the promise. Experience in recent months has shown that many cinema operators have repeatedly failed all funding schemes. “Trust is immensely damaged.”

It’s not like spring

Despite this skepticism, the German government is convinced that the renewed blockade will not lead to an economic crisis like in March. The German economy is stable, Altmaier said on Thursday. Supply chains around the world came to a halt in the spring, he continues. This time, only a few sectors are affected – and the consequences are therefore less dramatic.

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Altmaier says this, aware of the latest economic forecast of the federal government, which he wanted to present on Wednesday. Due to a meeting between Chancellor Angela Merkel (CDU) and the Prime Minister, she will now present her on Friday. It has already been announced that it will slightly increase the forecast. Instead of minus 5.8 percent, it now expects “negative growth” of 5.5 percent.

Dax on Thursday slightly higher again

The crash as in the spring is also out of sight on the stock market. Dax lost about four percent on Wednesday and lost about 1,000 points last week. On Thursday, however, the declining trend stopped and the German benchmark index even rose slightly.

After the decision on partial locking, stock market experts remain cautiously optimistic. “We still expect a recovery, but this is repeatedly hampered by failures,” said Joachim Schallmayer, chief strategist at Deka-Bank. He describes the new closure as a “disaster” for particularly affected sectors such as gastronomy and tourism.

On the other hand, he emphasizes: “The manufacturing and retail sectors do not seem to be so directly affected this time.” In addition, from his point of view, the markets in Asia remain stable – which is important for German exports.

Scholz considers that the measures are sufficient.

Felix Herrmann, investment strategist for Germany, Austria and Eastern Europe at Blackrock, is significantly more skeptical. It also assumes that the economic consequences of the new lock will be smaller than for the first time in the spring.

However, he warns: “Markets must now adapt to the fact that the boom of the last few months is over.” In his view, drastic but temporary measures would be less harmful than continuing uncertainty in the face of a growing number of infections.

Measures are already drastic for the disabled. From Scholz’s point of view, this is enough for the desired effect. Asked what financial assistance he has prepared, if a partial blockage does not have the desired effect, he says: “We are taking action because we believe it will work.” (S HB, dpa)

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