Lifting of locks against coronaviruses? Germany could be an example to follow

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The Brandenburg Gate casts long shadows over the almost deserted Pariser Platz on April 15, 2020 in Berlin, Germany.

Kay Nietfeld | dpa | photo alliance via Getty Images

While much of Western Europe struggled to contain the coronavirus pandemic, Germany appeared to be relatively easy to navigate through the epidemic, with generalized testing and contact tracing that helped maintain its mortality rate much lower than that of its peers.

It may be time to turn to Germany to find out how to lift the lock as well.

On Monday, Germany began to temporarily lift its restrictions, small retailers of less than 800 square meters being allowed to reopen, as long as hygiene and social distancing measures could be maintained. Large car dealerships, bicycle shops and bookstores have also been allowed to open.

The country’s influential and economically vital auto industry lobbied for the lockdowns to be relaxed, and the VW car group opened one of its main manufacturing plants in Germany, in the city of Zwickau, on Monday. other factories to follow next week.

Schools will reopen on May 4, with priority given to students taking exams. Large mass rallies will however be banned until August 31, and restaurants, cinemas and department stores are closed for the time being. In short, Germany seems to have a clear plan on how to reopen its economy.

Under control

Germany has 147,065 confirmed cases of coronavirus, according to data compiled by Johns Hopkins University (JHU), and has recorded 4,862 deaths.

These figures are significantly lower than those of some of its European neighbors: on Monday, Spain recorded 20,852 deaths (and more than 200,000 cases of virus), Italy recorded more than 24,000 deaths and France more than 20,000 deaths while the death toll in the UK has risen to 16,550, according to JHU.

The Robert Koch Institute, which gathered data on the country’s coronavirus, said on Friday that the rate of reproduction or transmission (the number of people each infected person infects) fell below one for the first time . This is a closely watched measure that has led German Health Minister Jens Spahn to say, “As things stand, the epidemic is once again controllable.”

The strategists noted that Germany had the right strategy to manage the coronavirus epidemic and that others could learn from Berlin.

“(The) result was that Germany was better prepared, more decentralized (with a dispersed number of laboratories capable of instituting large-scale tests quickly and the possibility of contacting the trace) and faster to react,” said Bill Blain, investment strategist. The firm Shard Capital, told CNBC on Monday.

He said countries like the UK, where he is based, which has been criticized for not doing nearly as many tests or contact tracing, should learn from the example of Germany.

“The next step is to reopen the economies, and again, Germany is in a better position with more tests and more contact data. In the continued absence of good data, the UK would be wise to carefully monitor what Germany is doing, “he noted.

Germany’s cautious reopening to its economy could also give other European economies that have not yet lifted their restrictions (such as the United Kingdom and France) a glimpse of consumer reaction, and therefore of the economy.

“One of the questions is going to be, if you’ve been sitting at home during the lockdown, you’re actually forced to save money … then people will rush out and spend as soon as the lockdown barriers are partially removed ? “Said Paul Donovan, chief economist at UBS Global Wealth Management, on CNBC’s Squawk Box Europe on Monday.

“When we look at things like Google’s location data and anecdotal evidence from Germany, that’s going to be a very useful indication. “

A lady walks past a sign in Berlin, Germany, advising people to stay at home in the midst of the coronavirus pandemic.

Odd Andersen | AFP | Getty Images

Donovan also stressed that any second wave of virus would be accompanied by “better preparation”.

“In this way, health systems will be better able to cope with pressure and people will generally be better prepared, and companies will also be better … so the economic damage from new waves of viruses will be lessened,” he said, adding that subsequent blockages would also be on a smaller scale.

One size does not fit all

Germany is certainly not immune to the economic slowdown in the blockade. The International Monetary Fund predicted last week that the German economy would contract by 7% in 2020 due to the coronavirus. The county’s central bank, the Bundesbank, said in its monthly report on Monday that the economy is in a severe recession and that recovery is unlikely to be rapid, as “substantial restrictions” are likely to remain in place. for a certain time.

While it might be useful to examine how other countries are lifting their locks, economists have pointed out that there is no “one size fits all” approach.

“I don’t think there will be a single model people can point to and say ‘do it this way’ in terms of sequencing the opening (saving) backup, or even when things should to be reopened, “Neil Shearing, group chief economist at Capital Economics, told CNBC on Monday.

“Countries will open at different times, sectors will open in different ways,” he said, noting that the opening of car showrooms in Germany “clearly reflected the importance of automotive industry “in the country.

However, he added that although there is “no one-size-fits-all approach here, there will be some similarity and part of that will be opening up the economy sector by sector.”

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