Bundesbank said in its monthly report that the country is “facing previously unknown challenges as a result of the rapidly spreading coronavirus pandemic”. On the economy’s side, the “slide into a pronounced recession could not be prevented”. And, “economy recovery would only start when than pandemic risk was effectively contained”.
The coronavirus pandemic would affect the economy through various channels. Firstly, domestic service sectors will be most affected. Hospitality and entertainment sectors, trade fair and aviation companies are likely to “suffer particularly sharply from falling demand and precautionary closings”.
Other companies will also be affected by “potential loss of work and sales as a result of protective and precautionary measures”. Contagion effect from abroad would affect export and industry. Supply bottlenecks for important primary products threatened production bottlenecks. “All of these impairments listed can trigger negative confidence and second-round effects in Germany,” said the Bundesbank.
