How do you restart an economy that’s been shut down by a pandemic? The answer is: very, very carefully. Even as the novel coronavirus continues to spread around the world, European governments are starting to think about how to re-open factories, offices and schools while minimizing the chance of further outbreaks. Austria on Monday said it would gradually begin to reopen shops after Easter, becoming the first country in Europe to do so.Pressure is building on governments to explain their plans because of the mounting economic costs of measures designed to contain the coronavirus. It’s compounded by fears that food supplies and health care provisions could be undermined if the restrictions are in place for too long.While lockdowns are likely to remain for weeks — and in some countries, months — detailed planning done now could protect vulnerable people and help economies bounce back more quickly when restrictions are eased. Getting it wrong could lead to more outbreaks, another round of restrictions on work and public life, and much more economic pain.
In Germany, where 100,000 people have tested positive for coronavirus and nearly 1,600 have died, a group of economists, lawyers and medical experts are recommending a gradual revival ofEurope’s biggest economy that would allow specific industries and workers to resume their activities while steps are taken to prevent a resurgence of coronavirus.A dozen academics write in the report, which was published last week by the Ifo Institute for Economic Research, that they do not expect a vaccine or effective treatment for the coronavirus to be available before 2021. As a result, Germany should approach the fight against the disease “more like a marathon than a sprint.””Future measures must be designed and prepared in such a way that, on the one hand, they ensure good health care and, on the other hand, that they can be sustained over the necessary periods of time,” the experts write. “Planning for this transition must begin immediately in politics, administration, companies and other organizations.”Germany has ordered the closure of schools, restaurants, playgrounds, sports facilities and most shops until at least April 20, pushing an economy that was already teetering on the brink of recession into a deep slump. Government spokesman Steffen Seibert said Monday that he cannot yet provide a firm timetable for lifting restrictions. Ifo has forecast a 20% hit to GDP this year if the lockdown lasts for three months.
How to restart an economy
The German government is already rolling out an economic rescue package worth up to €750 billion ($825 billion) that includes measures to spur lending to businesses, take stakes in companies and support furloughed workers. The package is among the biggest launched anywhere in the world.The Ifo report suggests the country should now create a national task force of experts and public representatives that would make recommendations on how to ease restrictions on work and public life, and when industries should restart production. Going back to work would be voluntary for employees.Industries such as telecommunications and auto production that add the most value to the economy should be prioritized, the report says, while work that can easily be done from home should continue to be done remotely. Nurseries and schools would open relatively quickly, because young people rarely have severe symptoms and parents cannot work if child care facilities and schools remain closed.
