The coronavirus outbreak is hitting the German economy leaving supply chains at risk the in coming weeks, Economy Minister Peter Altmaier said on Tuesday.
Asked if Europe’s largest economy was heading into a recession in the first half of this year, Altmaier said the situation was very difficult and that he hoped Germany could avoid the type of coronavirus-related restrictions to travel and civic life enforced in Italy.
As of Monday, Germany had registered 1,139 coronavirus cases with two fatalities, according to government data.
Altmaier, speaking after talks with economy ministers from the 16 regional state governments, said Chancellor Angela Merkel’s cabinet would on Wednesday pass more flexible rules on short-time working to help companies bridge liquidity problems and avoid layoffs.
“We’re expecting supply chains to be impacted, especially in the industrial sector, and this will become visible in its full extent only in the coming weeks,” he said.
China, where the coronavirus was first diagnosed in late 2019, is Germany’s biggest trading partner, and German companies depend on both Chinese demand and supply chains.
Seaborne deliveries from China can take up to six weeks, so the epidemic and related production stops there are hitting the German economy with a time lag.
Altmaier said the federal government and the 16 regional states were determined to do everything to shield the economy from the impact of the epidemic, and that existing liquidity programs and recently agreed measures were worth several billion euros.
Globally, more than 110,000 people have been infected with the coronavirus and more than 4,000 have died, according to a Reuters tally of government announcements.