Recruit Sales in Germany Covid 19 Update Bulletin June 2020

Germany to reopen borders on June 15

Germany will start relaxing border controls with at least three countries – Austria, Switzerland, and France - this Saturday. The government hopes these borders will be completely open by June 15.

German Chancellor Angela Merkel has said she wants all of the emergency border controls introduced to contain the coronavirus to be removed within Europe's 26-state Schengen visa-free zone from June 15 onwards.

Merkel's statement echoed comments made earlier in the day by Interior Minister Horst Seehofer.

Border controls will remain in place, but only random checks will be carried out. Additionally, all border crossings between these countries will be reopened, rather than selected ones at present. The use of spot checks should ease traffic jams for commuters over the border, who have been allowed to cross.

Unrestricted crossings between these neighbouring countries will be allowed by June 15. He said the borders will be closed again if the health situation deteriorates. He said he would consider re-opening borders with Denmark on the same date. 

The border with Luxembourg will be completely open by this Saturday, Seehofer said. 

The Austrian government has confirmed reports that it plans to reopen the border with Germany on June 15. Austrian Tourism Minister Elisabeth Köstinger told radio station Ö1 it had come to an agreement with Germany. 

 

Germany GDP report June 2020 - What they are saying

The German economy plummeted in the first quarter of 2020 because of the corona pandemic as it has not since the financial crisis of 2008. Economists are talking about a "technical recession".

The gross domestic product (GDP) shrank in the first quarter by 2.2 per cent compared to the previous quarter, the Federal Statistical Office announced yesterday. "This was the largest decline since the global financial and economic crisis of 2008/2009 and the second-largest decline since German unification," said the Federal Statistical Office, which confirmed a first estimate from mid-May.

Above all, the 3.2 per cent decline in private consumption compared to the previous quarter and a decline in equipment investment by 6.9 per cent caused the economy to plummet.

Companies invested significantly less in machinery, equipment, vehicles, and other equipment. Increased building investment and government spending prevented the crash, according to the information.

The pandemic spread across Europe in March. Exit restrictions closed borders and business largely brought economic life to a standstill. According to the most recent calculation by statisticians, economic output had already declined by 0.1 per cent in the final quarter of 2019 compared to the previous quarter. If economic output falls two quarters in a row, economists speak of a "technical recession".

Economists estimate that the consequences of the crisis will be even more severe in the second quarter. "Economic output is likely to be significantly lower than the average of the first quarter already depressed," said the latest monthly report from the Deutsche Bundesbank. Various forecasts in the market assume a slump in German GDP of up to 14 per cent moving forward.

Foreign trade also collapsed due to the virus crisis. Exports fell by 3.1 per cent and imports decreased by 1.6 per cent. Since the strict containment measures due to the corona pandemic only started in mid-March, the "lockdown" is likely to slow the economy down much more in the second quarter 2020 than at the beginning of the year.

The German government expects the worst recession in the post-war period in 2020: the gross domestic product is expected to collapse by 6.3 per cent. Economists and trade associations expect an even deeper slump.

According to its latest forecast, the German Chamber of Commerce and Industry fears a 10 per cent decline in GDP for the year as a whole. The Kiel Institute for the World Economy (IfW) anticipates a drop of 7.1 per cent.

At the end of March, the Federal Government's Council of Economic Practices had already made it clear that Germany was inevitably stepping into recession.

In their special report on March 30, they made it clear that a recession in Germany could not be avoided in the first half of 2020. "We assume that the corona pandemic will have a major impact on the global economy," said the Chairman of the Expert Council.

Compiled by SA in June 2020 from various news sources

*Please note the information contained herein is an aggregate of news stories, by commentators widely available - readers should seek independent verification, and this in no way represents the views or opinions of Standley Associates.

We will continue to check the news reports and will provide monthly summaries of the trends.