Europe Economy

German firms expect coronavirus restrictions to last until April

Key Points
  • Ifo's last business survey in July asked different sectors how long they expect restrictions on public life to last.
  • Service providers expect restrictions to last 8.9 months, trade-oriented businesses expecting 8.6 months, construction 8.2 months, and manufacturing 7.8 months.
  • "Companies in the leisure sector in particular fear a longer period of restrictions: 13.0 months," Ifo said.
People in protective clothings are pictured while checking the body temperature of people crossing the German-Polish border on March 18, 2020 in Goerlitz, Germany.
Florian Gaertner | Photothek | Getty Images

German businesses expect coronavirus restrictions on public life to continue for another 8.5 months on average, according to the closely-followed Ifo institute, as the rising number of coronavirus infections in Germany prompts concern.

Ifo's last business survey in July asked different sectors how long they expect restrictions on public life to last, with service providers expecting restrictions to last 8.9 months, trade-oriented businesses expecting 8.6 months, construction 8.2 months, and manufacturing 7.8 months.

"Companies in the leisure sector in particular fear a longer period of restrictions: 13.0 months," Ifo said as the research was published Monday, while those in the arts activities business and those in restaurants and catering expect restrictive measures for 11 months.

The survey comes as Europe's businesses look to recover from the coronavirus pandemic amid concerns over a rising number of infections in a number of countries in the region, including Germany.

The virus' reproduction rate (defined as the mean number of people infected by one infected person) rose in Germany to 1.16 on Friday, the highest level in 10 days. Germany estimates its R-rate by using a four-day moving average and says the value reflects the infection situation about one to two weeks ago.

The Robert Koch Institute (RKI), Germany's public health body, said it was seeing many smaller case outbreaks across the country in different administrative districts and in various settings, such as larger family events, leisure activities, occupational settings, but also in community and health facilities. In addition, Covid-19 cases are increasingly being identified among people returning from travel abroad, the RKI said Friday.

It warned that the increase in the number of reported Covid-19 cases over the past few weeks was "very concerning."  A further 5,271 new cases were reported in the last seven days, the RKI said Sunday.

"The number of new cases reported daily has been increasing since calendar week 30. This development is very concerning and will continue to be monitored very closely by the RKI. A further worsening of the situation must be avoided," the RKI noted.

This "will only succeed if the entire population continues to be committed to decreasing transmission, e.g. by consistently observing rules of physical distancing and hygiene — also in outdoor settings — by airing indoor areas and, where indicated, wearing a community or face mask correctly," it added.

Economists at Deutsche Bank said Monday that the increase in Covid-19 infection rates in Germany and elsewhere "is a concern, although not yet alarming."

"For seasonal reasons we expect elevated rates until spring 2021. We assume that a vaccine will be widely available by mid-2021, generating a confidence boost for the back part of that year," economists led by Stefan Schneider said in a note.

Deutsche Bank's economists now expect German GDP (gross domestic product) to contract by 6.4% in 2020 (compared with -9% predicted in early May) followed by a 4% increase in 2021. Still, the pre-Covid output level will not be reached before mid-2022, they predicted, adding that the margin for error is high.

"The current exceptional volatility in monthly data and the further development of the global pandemic imply that the error margins remain exceptionally high."

To date, Germany has recorded 217,288 coronavirus infections and 9,202 deaths, Johns Hopkins University data shows, a far lower number of fatalities than many of its European peers.