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India's First International News Journal

Tuesday, June, 28, 2022

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GDP could drop by up to ten percent

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Wiesbaden – According to the Hessian Minister of Economic Affairs Tarek Al-Wazir, the corona crisis could hit the economy much harder than previously thought. “What I have to worry about is that the depth of the cut that we are currently experiencing has not yet been understood,” said the Greens politician at the German Press Agency in Wiesbaden.

According to him, the gross domestic product (GDP) could collapse by up to ten percent. For Hessen, that would mean that of the 300 billion euros in economic output this year, 30 billion euros were missing. Such a slump could not be compensated for by a state program, but only overcome step by step.

Federal Minister of Economics Peter Altmaier (CDU) also anticipates an economic downturn as a result of the Corona crisis. The cuts would be at least as strong, if not more, than in the 2009 financial crisis, he said last week. At that time, GDP had dropped by 5.7 percent. According to Altmaier, his ministry assumes that the economy may collapse by more than eight percent in individual months in spring.

Al-Wazir said: “At the moment we are still in the phase where many are only slowly realizing the incredible speed at which our economic life has been brought down.” The question of how long this phase lasts is the difficult thing about this crisis because it cannot only be answered economically, he emphasized. One should rely on the fact that the health policy measures worked. This includes the closure of restaurants and shops as well as the strict contact rules.

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Despite the severe economic consequences, Al-Wazir was convinced that these measures were correct. “We have to break the exponential growth in the spread of infections.” Otherwise, the country would find itself in a situation in which the healthcare system would be overloaded. “What that looks like can currently be seen in Spain, Italy, and the USA.” But of course, there is hope that the health policy measures will be successful so that one can then get closer to normal again step by step in business life.

“I am optimistic about the future, that we have a state capable of action, in all areas,” said Al-Wazir. “”We reacted in Germany and Hesse like no other country in the world.” Every small trader has the right to immediate business help, the possibility of easier access to state-guaranteed liquidity and a livelihood. “It is an achievement in which I also rely on the fact that more people realize what they have in their state structures.” Even after the financial crisis of 2009, government aid would have contributed to the rapid economic recovery afterward.

The debt brake has proven to be correct, consolidating budgets in good times and helping to ensure that the state has unlimited credit in emergency situations. “In Germany, we are as well prepared for such a situation as possible,” said the minister. The corona crisis would certainly trigger a surge in digitization in the economy. “And I hope that this will not only work in favor of Amazon and the like, but also that the small retail trade in the shock situation will have noticed that it needs action at this point, but also opportunities,” said Al-Wazir.

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Author

Qamar Munawer
Qamar Munawer
Jr. Editor at The Eastern Herald. Studied Bachelor in Architect in Chandigarh, India. Collecting and writing newsworthy stories from around the world. I love to praise nature.

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