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With the partial lockdown during November, the German economy will almost certainly see another negative quarter, even in an optimistic scenario where restrictions succeed in squashing new infections and will be completely abolished by the end of November, according to Deutsche Bank.

Coronavirus cases continue rising in the northern hemisphere and governments are waiting for recent measures to flatten the curve. EUR/USD remains under pressure below 1.17.

Key quotes

“Dampened by COVID-19, but empty government coffers might soon drive up state-administered prices. While the pandemic has for now lowered inflation significantly, potential price-increasing effects could come from higher administered prices.”

“The number of patients in intensive care and hospital capacity is just as important as the number of new infections. We estimate that 400,000 acutely infected patients are the limit for intensive care units.”

“Despite the corporate sector’s improved resilience and favourable financing conditions, insolvencies will rise once the bankruptcy waiver is completely lifted. With loan loss provisions possibly tripling, the banking industry will probably record a net loss this year.”

“Global car demand is recovering, courtesy of China. But surging COVID-19 infections in the EU and the US will hit sales in the next few months. German car production should decline by 25% in 2020.”

“Global production in the construction sector was back at the pre-COVID level in summer. The recent surge of infections in the northern hemisphere weighs on the outlook over the winter.”

“The EU is working towards a better coordination of the national COVID-19 policies. This should prevent renewed border closures at least for goods and labour.”