Coronavirus impact felt across Germany

MUNICH/BERLIN (Reuters) — The coronavirus epidemic sweeping Europe is stifling hope of a first-quarter upswing and will weigh on Germany’s economy until at least the third quarter, the Economy Ministry said, even after more measures were unveiled on Monday to cushion the blow.

With almost 5,000 people infected and 12 dead in official figures published over the weekend, Germany is preparing for serious disruption. Some border controls have been reinstated and regions are introducing ever more severe lockdown measures. The Economy Ministry warned that even in a best-case scenario where the severed supply chains that link Germany’s export-dependent economy to the world are quickly repaired, stabilization would come in the third quarter at the earliest.

“The strength and duration of the impact cannot yet reliably be forecast,” the ministry said. But given the virus’s rapid spread, “we have to anticipate significant economic impacts.”

Germany temporarily reintroduced border controls over the weekend with Austria, Switzerland, France, Luxembourg and Denmark, while schools are shut across the country. With further measures under consideration, the government has advised citizens against all nonessential trips abroad, and a spokeswoman said the government was in talks with airline Lufthansa about repatriating thousands of Germans.

Disruption is being felt across the economy. Vacation operator TUI said late Sunday it would scrap most of its operations, withdraw its outlook and apply for state aid in response to the collapse in demand for flights. Two of Germany’s largest banks said they would temporarily close hundreds of branches to prevent the spread of the virus.

The federal government has loosened insolvency rules that risked forcing companies into declaring bankruptcy while they waited for state aid to arrive. Supermarket chain Rewe put out a call for students cooling their heels after universities postponed the start of teaching to help restock shelves emptied by panic-buying.

Bavaria, the wealthy southern state that is home to some of Germany’s biggest companies, including carmaker BMW and engineering giant Siemens, unveiled a €10 billion fund to let the regional government buy stakes in struggling companies.