German Economy To Be Hit By Coronavirus Outbreak


The German economy is in a precarious position as it faces the impacts of manufacturing shortages from China.

Germany’s economy is based on a growth model that prioritizes exports to other countries rather than trying to nourish domestic demand amongst its population. However, being exports driven means that the German economy is also reliant on parts manufactured in China. Manufacturing was substantially stalled in China due to the coronavirus outbreak and although production is slowly restarting throughout China, it is not doing so at a rate fast enough to satisfy demand.

As a result, Germany will have to stall its own production processes and take a hit to its economy. German companies have relied on parts saved in their stocks and on shipments that were sent out before the coronavirus outbreak, but that will not last much longer. According to the Federation of German Industries, 5,000 German companies located throughout China have been impacted by the outbreak through decreased sales or stalled production.

“When the last ships reach our harbors in a week or 10 days, that will be it from China,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China.

Auto sales are expected to decrease, which is a major sector in the German economy. Sales of cars had already been decreasing because of lower demand and tighter emission regulations.

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Economics, Finance and Investing