How to revive the economy after the coronavirus? German experts have a plan

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(CNN Business) – How do you reactivate an economy that has been suspended by a pandemic? The answer is: with much, much, care.

Even in a time in which the new coronavirus continues to spread around the world, the european governments are already beginning to think about how to reopen the factories, offices and schools, while minimizing the possibility of new outbreaks. On Monday, Austria said it would begin to reopen gradually the stores after Easter, being the first country of Europe in doing so.

The pressure on governments is increasing in order to explain what are plans due to the rising economic costs of the measures designed to contain the coronavirus. There are also fears that supplies of food and provisions of health care may be affected if the restrictions remain in force for too long.

While it is likely that the measures of confinement were extended for weeks –and in some countries even months–, the detailed planning that is done now could protect vulnerable people and help economies to recover more quickly when you reduce the restrictions. Now, doing so incorrectly could cause more outbreaks, another round of restrictions in work and public life, and much more economic pain.

In Germany, where 101.000 people have been positive for coronavirus, and more than 1,600 have died, a group of economists, lawyers and medical experts recommend a gradual recovery of the largest economy of Europe which would industries and workers specific to resume their activities while measures are taken to prevent a re-emergence of the coronavirus.

A dozen scholars wrote in the report, published last week by the Ifo Economic Research, we do not expect a vaccine or a treatment effective against the coronavirus before 2021. As a result, Germany should address the fight against the disease “more like a marathon and less like a race at full speed”.

How will recover the economy after the coronavirus? 1:47

“Future actions must be designed and prepared in such a way that, on the one hand, to ensure good medical care and, on the other hand, can be maintained during the periods of time necessary,” noted the expert. “The planning for this transition must begin immediately in the policythe administration, businesses and other organizations,” they added.

Germany has ordered the closure of schools, restaurants, playgrounds, sports facilities and the majority of the stores until at least April 20, which pushes an economy that was already on the brink of recession to a deep depression. The government’s spokesperson Steffen Seibert said on Monday that he still can not provide a final deadline for lifting the restrictions. Ifo has predicted an impact of 20 per cent in the GDP this year if the lockout lasts three months.

How to revive an economy

The German government is already implementing an economic rescue package of up to 750,000 million euros (825.000 million dollars), which includes measures to stimulate lending to companies, take stakes in companies and support workers in licenses. The package is among the biggest launched in any part of the world.

The report of the Ifo suggests that the country should now create a working group of national experts and public representatives who would make recommendations on how to alleviate the restrictions in work and public life, and when should the industries to recommence production. Return to work would be voluntary for employees.

A man with a mask walking in an empty street during the crisis of the coronavirus in Berlin, Germany. (Credit: Maja Hitij/Getty Images)

Industries such as telecommunications and automotive production that add the most value to the economy should have priority, according to the report, while the work that can be done easily from home should continue remotely. Child care centres and schools would open relatively quickly, because young people rarely have severe symptoms and the parents may not work if child care facilities and schools are closed.

Nothing of night clubs or big events

Companies that manufacture products or components come out, they should also reopen quickly, while the hotels and restaurants they would only be able to do it in a “very careful and controlled,” because it is difficult for people to maintain distance in such establishments. The discos and the clubs should remain closed for the time being, according to the report, and events with a large number of viewers should not be carried out.

The experts say that it is possible to set different measures in different regions. The restrictions could be relaxed first in places with low rates of infection, or with a reduced risk of transmission, such as rural communities. As time passes, regions where the population has accumulated a certain degree of immunity could operate with fewer restrictions.

That, of course, requires testing coordinated and large-scale detection of the coronavirus. It would also be necessary extensive training on proper hygiene and new rules that force you to use personal protective equipment.

The experts also recommend that Germany organize an increased “mass” in the production of protective clothing and masks, to increase its production capacity of drugs and vaccines and to establish a platform of information technology that allows for strategic planning.

And while the working group would make recommendations, politicians and business leaders would take the final decision on when to lift the restrictions. “The attempt to control centrally the resumption of the production… would not work in practice. This renewal must be controlled primarily by the institutions and companies”, said the report.

Looking to China

The countries that try to boost their economies while preventing a second wave of infection of the coronavirus can find in China tracks on the works and what doesn’t.
The country probably suffered its first economic contraction in decades during the first quarter of the year, after the central government in Beijing imposed drastic measures to contain the spread of the coronavirus.

Can we trust the figures from China on coronavirus? 4:58

China has embarked on an aggressive plan to save its economy, launching policies and campaigns to encourage people to return to work, encourage business confidence, and protect the greatest possible number of companies. Beijing is spending billions of dollars in medical supplies and treatments, while injected money into infrastructure projects to create jobs. It has also eliminated road blocks and allowed people to travel more freely in areas where the virus seems to have run its course.

But it is too soon to evaluate the results. There are emerging questions about whether you can rely on the data of infection reported by Beijing, and has seen a large number of people flocking to tourist sites during the weekend. Some companies were quick to return to work too soon, complicating recovery efforts. A major producer of titanium restarted their factories in February, only to stop working again because the workers were infected.

The need for balance

Dr. Anthony Fauci, the leading expert in infectious diseases of United States, recently said that, while the public health is your top priority, keep the society and the economy in a confinement total for too long would have negative consequences involuntary.

And the former british prime minister Tony Blair told the BBC on Monday that he was “terrified” by the economic damage that the measures of confinement were causing to the Uk economy, estimated by the Center for Economic Research and Trade in 2,900 million dollars per day.

“If it continues for a long period… it also affects the ability to operate the health care system effectively,” said Blair.

Fauci said that how to achieve a proper balance is a question that countries around the world are considering while the coronavirus continues to spread.

“People rely on supply chains for nutrition, for food,” he told the journal The New York Times. “You can die of hunger. People have diseases. If you interrupt dramatically that to the point that it no longer exists, the disruption of the society can be truly catastrophic,” he said.

“We need to make sure to keep the attention in the balance”, he added.

Laura I have and Stephanie Halasz contributed to this report.



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