The coronavirus pandemic would cost Germany “hundreds of billions of euros” in production losses, the Munich-based ifo Institute announced on Monday.
“The costs will probably exceed everything we have seen from economic crises or natural disasters in Germany in recent decades,” said ifo President Clemens Fuest.
The German economy would shrink by 7.2 to 20.6 percentage points, which corresponded to costs between 255 and 729 billion euros (up to 780 billion U.S. dollars), according to ifo’s calculation.
In a positive scenario assumed by ifo, the output of the German economy would fall to below 60 percent for only two months, then recover to around 80 percent in the third month and finally normalize in the fourth month.
During a partial shutdown of economic life in Germany for three months, cost would at least reach 354 billion euros. According to ifo, extending the partial closure would result in additional costs of 25 to 57 billion euros per week.
According to Fuest, the coronavirus crisis would also cause “massive distortions” in the German labor market that would even dwarf the conditions at the height of the financial crisis.
According to ifo, up to 1.8 million jobs in Germany could be cut and more than six million employees could be affected by short-time working.
Ifo said strategies were needed to restart production while at the same time further containing the epidemic.
Two weeks ago, the German government presented measures to dampen the economic consequences of the coronavirus pandemic.
The government had announced an unlimited credit program for larger companies. In addition, it is planning to support freelancers and small businesses with a maximum of ten employees with funds of up to 50 billion euros.
“The aim must be to shorten the partial shutdown of the economy without compromising the fight against the epidemic,” Fuest commented, noting that it would be “worth devoting virtually every conceivable sum to health policy measures.” ( 1euro = 1.07 U.S. dollars)