World News

Coronavirus darkens outlook for German exporters, Ifo reports

BERLIN (Reuters) – Morale among German exporters fell to its lowest since the global financial crisis, an Ifo institute survey showed on Thursday, signaling rough times ahead as the coronavirus outbreak eats away at global economic growth.

The Munich-based economic institute said export expectations in March fell to -19.8 from -1.1 in February, the lowest level since May 2009 and the steepest fall since German reunification three decades ago.

“The Coronavirus pandemic is putting the brakes on world trade,” Ifo chief Clemens Fuest said in a statement. “Transnational logistics will become more difficult. As an export-nation, Germany is particularly affected.”

Ifo said on Wednesday that the German economy could shrink by as much as 20% this year, a devastating forecast whose impact Chancellor Angela Merkel’s government wants to cushion with a 750 billion-euro ($820 billion) stimulus package.

German manufacturing had been in recession for months and the economy had been relying on services for growth. The coronavirus crisis, which has shut down restaurants, malls, and retailers, is expected to leave its mark on both sectors and lead to a surge in unemployment.

An separate Ifo barometer for German employment fell in March to its lowest level since January 2010, the newspaper Handelsblatt reported, adding that the drop is the biggest since records began in 2002.

“German companies are putting the brakes on personnel planning,” Ifo expert Klaus Wohlrabe said of the data, which the Munich institute calculates monthly for Handelsblatt based on the employment intentions of around 9,000 companies.

“A rise in unemployment will be unavoidable despite short-time work”, Wohlrabe said, referring to a government-backed scheme that allows firms to put workers on shorter hours.

The Federal Employment Agency’s research arm said on Thursday that its own barometer gauging the health of the labor market recorded its biggest-ever monthly fall in March. It said it expects a significant rise in unemployment.

Ifo’s exports survey showed that the outlook had darkened for all manufacturing sectors, particularly auto makers, which are expecting a significant fall in exports. Manufacturers of electrical equipment and the chemicals industry expect a moderate fall in exports, Ifo said.

(Reporting by Joseph Nasr and Paul Carrel; editing by Toby Chopra, Larry King)