German recession is inevitable, but budget will cope
US, WASHINGTON (ORDO NEWS) — A deep recession in Germany, the largest economy in the eurozone, is now inevitable given the crisis due to coronavirus, but the state budget can quite cope with this situation, according to a monthly report from the country’s central bank on Monday.
Germany was on the verge of a recession even before the current crisis, but now the domestic economy, which has supported growth amid the global trade war, will suffer a serious blow, the Bundesbank said in a statement.
“Sliding into a pronounced recession cannot be prevented,” the Bundesbank said, arguing that government measures could at least strengthen the belief that unavoidable economic costs could be overcome.
“Germany’s state budget is in a good position for this.”
Berlin is preparing emergency measures in excess of 150 billion euros ($ 160 billion) in the hope of mitigating the long-term damage from the recession and preserving jobs in companies at risk in a pandemic.
The European Central Bank (ECB) also promised support by buying up eurozone government bonds worth up to 1.1 trillion euros this year. Such a measure should help keep borrowing costs low for countries and companies.
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