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German economy heading for deep slump and lower emissions due to coronavirus
(Clean Energy Wire, 19 Mar 2020) The economic crisis caused by the new coronavirus will sharply slow economic activity and the associated greenhouse gas emissions in Germany. Given the extremely wide range of current economic forecasts, it remains impossible to make detailed predictions for CO2 output.
The German economy faces a deep recession due to the lockdown in response to the coronavirus pandemic, potentially exceeding by far the 2009 slump caused by the financial crisis, leading economists have predicted.
Economists at the Kiel Institute for the World Economy (IfW) now estimate that the economy could shrink between 4.5 and 9.0 percent in 2020, depending on the duration of the shutdown. Economists at Deutsche Bank pointed out that unlike in 2009, when the recession mainly affected manufacturers, the services sector is severely hit this time, too. The Leibniz Institute for Economic Research (RWI) meanwhile cut its forecast less drastically, predicting a decline in GDP by 0.8 percent in 2020.
"Clearly, the economic impact of the virus will be drastic. For a good reason, French president Emmanuel Macron described the situation as almost war-like," Martin Cames, head of the energy and climate division in the Institute for Applied Ecology's Berlin office, told Clean Energy Wire.
"I expect the slump will be more severe and more prolonged than after the financial crisis. As a result, emissions will decrease significantly, but it's far too early for serious forecasts," said Cames, adding that emissions in China had been around 25 percent below normal levels as a consequence of the pandemic.
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