How to Restart the Economy After a Pandemic, According to German Experts
Thu, September 29, 2022

How to Restart the Economy After a Pandemic, According to German Experts


The world has sacrificed economic activity for quarantine measures. / Photo by OSORIOartist via Shutterstock


The world has sacrificed economic activity for quarantine measures. But after the battle to contain the virus and no new cases of Covid-19 arise, how does a country restart the economy? German experts recommend gradual revival. It has to be done “very carefully.”


Recommendation from German experts

A group of medical experts, economists, and lawyers have recommended a gradual revival of Germany, a country with the biggest economy in Europe. This plan requires allowing certain workers and industries first to resume their activities while still taking steps to prevent the resurgence of the virus. As of writing, the country has 103,375 reported coronavirus cases, 1,810 deaths, and 36,081 recovered. Out of the total Covid-19 patients, 93% are in mild condition while 7% are in serious or critical condition, reports coronavirus counter Worldometers.

While the coronavirus disease continues to spread in different parts of the world, governments in Europe are already beginning to plan how they will reopen factories, schools, and offices in their respective countries while they minimize further outbreaks. On Monday, for instance, Austria announced that it will gradually reopen shops after Easter. It will be the first European country to restart its economy after the shutdown caused by the pandemic.


The economic cost of saving lives

The economic shocks of containing the virus were relatively modest at the start but they are now growing and governments are pressured to explain their plans. There are also fears that health care and food supply provisions may be compromised if restrictions are observed for a long period. So, although lockdowns may last for weeks or months, having detailed planning on how to reopen the economy will not just help the country bounce back quicker than not having a plan but will also protect those in the vulnerable sectors.

German experts said that making a mistake in the reopening of the economy can lead to another round of restrictions in public life and work or more outbreaks. In short, further economic pain. Some details of the plan were published on CNN Business.



Approaching the fight against COvid-19 like a marathon

In an academic study recently published by the Munich-based research institute Ifo Institute for Economic Research, the authors explained that they are not expecting an effective treatment or a vaccine for coronavirus to be available to the public before 2021. This is why Germany needs to approach the fight against Covid-19 “like a marathon than a sprint.” In sports, marathon and sprinting running are at the very opposite ends of the athletic spectrum. Sprinters have to maximize every muscle movement to improve their speed for a few seconds of running while marathon runners should maximize their movement for endurance as they often have to run for hours.

The experts wrote that Germany should design future economic measures in a way that will ensure good health care but also in a way that can be sustained for a “necessary” period. The plan for this kind of transition should start immediately in companies, administration, politics, and other organizations, the experts said.

The country has already directed the closures of schools, sports facilities, playgrounds, restaurants, and most shops until at least April 20. It has been a challenge for Germany as it was already unstable and on the brink of recession even before the pandemic. Dutch bank ING’s chief economist in Germany Carsten Brzeski previously said that the 2019 GDP report of Germany signifies the end of its “golden decade.” Its GDP for three months ending in June was about 0.1% compared to the previous quarter.

Europe’s most powerful economy depends heavily on exporters that sell most of its goods to the US and China, who were previously involved in trade conflicts. This plunged the export-dependent manufacturers in Germany into a recession, hindering its growth. Then came the pandemic.


Germany’s top 10 exports, by category

Germany’s top exports in 2019 are machinery including computers: US$260.7 billion (17.5% of total export), vehicles: $243.7 billion (16.4%), electrical machinery, equipment: $158.7 billion (10.7%), pharmaceuticals: $90.4 billion (6.1%), optical, technical, medical apparatus: $79.3 billion (5.3%), plastics, plastic articles: $63.2 billion (4.3%), aircraft, spacecraft: $42.3 billion (2.8%), mineral fuels including oil: $34.2 billion (2.3%), articles of iron or steel: $31.3 billion (2.1%), and other chemical goods: $26.3 billion (1.8%). This data was provided by trade metrics site World’s Top Exports.



Reopening the economy

An economic rescue package amounting to €750 billion ($825 billion) is now being rolled out by the government. This includes offering loans to companies to stop them from collapsing, support furloughed (unpaid but not laid off) workers, and stakes in firms. Its economic rescue package is among the biggest launched compared to other countries.

It was suggested in the Ifo report that Germany should form a national task force of public representatives and experts to make recommendations on how the country should ease the restrictions on public life and work, and when it would be the appropriate time for industries to restart their production. The researchers believe that it should be voluntary for the workforces to go back to work.

The sectors that should be prioritized include auto production and telecommunications as they provide the most value to the economy. On the other hand, work that can be easily done remotely should continue for the time being. Another suggestion is that schools and nurseries can be opened relatively quickly as young people rarely have severe symptoms and their parents cannot easily work if schools and childcare facilities remain closed. Firms that produce healthcare products should likewise reopen quickly while restaurants and hotels should be reopened in a “controlled manner” or their reopening be done “very carefully” since it would be difficult for people to maintain distance in these establishments.

Meanwhile, the report pointed out that clubs and discos should remain closed and events that will cater to a large number of audiences should be canceled. The German experts said that different rules may also be implemented in different regions. For instance, restrictions can be eased in certain places that have a low rate of infection or have reduced risk of Covid-19 transmissions, like the rural communities.

Germany should strike a balance in reopening its economy after the pandemic. It may even take clues from China on what doesn’t work and what does in jumpstarting its economy.


Germany should strike a balance in reopening its economy after the pandemic. / Photo by Zerbor via Shutterstock