Merkel on the brink: Germany set for coronavirus economic catastrophe - shock report

Berlin’s reliance on exports will hinder its recovery as the global pandemic weakens foreign demand. Economic and financial analysis by financial services giant ING has warned “countries that rely on exports will be the most heavily affected”. The paper lists Germany as one of the top ten global economies expected to be devastated because the lack of worldwide demand for its main export markets.

“Of the top 10 largest economies in the world, Germany is most affected through this (export) channel of the value chain, followed by Canada,” it said.

Germany exported some £1.2 trillion of goods globally in 2019, according to ITC data.

The report said: “Open economies will suffer for a longer period of time from the supply and demand effects of the coronavirus.

“Even after the virus has been brought under control domestically, an open economy will continue to suffer from the virus because of falling demand in countries that are still suffering the crisis.”

Germany’s economy is particularly vulnerable to an output shock because of its dependence on foreign demand for its machinery, cars and pharmaceutical goods, the report added.

Countries who export less – such as the US, India and Brazil – are forecast to suffer less, according to ING.

But its report warned closed economies aren’t necessarily going to be better off.

“Whether a country is better of depends to a large extend on the question of how much its production capacity is hit by the virus,” it said.

ING analysts said countries who come out of the coronavirus crisis first will lead the way in terms of economic recovery.

China is expected to be one of the first major economies to recover because it is “ahead of most other countries in containing the virus”.

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There is a “substantially higher risk” among households that rely on industries that are particularly vulnerable to the COVID-19 outbreak.

These include tourism in Thailand and the Pacific Islands, and manufacturing in Vietnam and Cambodia.

The World Bank’s baseline scenario sees almost 24 million failing to escape poverty in the region due to the economic impact of the global pandemic.

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