If todays German manufacturing index data is not a warning sign of the biggest posiblle recesion in recent history, nothing is in my point of view. IMF business climate index fell to 86.1 which is the lowest level since August 2009. Also, based on the GDP projection from Klaus Wohlrabe, the World could retun in 30’s crisis and fall in to huge depresion. If we take look at the previous recesion and huge financial crisis, Germany’s GDP fell 5% in 2009 and it was the biggest recesion for Germany since World War II. Their projection then was fall of 2.2%. Imagine how devastating could be fall of more then 5% and as we see recently, everything is on hold around the World, service and production. We never experienced something like Corona virus, this is new to all of us.
Btw. You all know that I live in Dubrovnik, but what you don’t know is that my town is home to ancient quarantine facilities. I read about it before, but Corona virus reminded me how Dubrovnik was the first city in Europe to set up a quarantine system in 1377. as protection from leprosy. Yes, you read it well, in 14th century. Even The New York Times wrote article about it yesterday. Read it, it’s very interesting to see how they defend it then from things we are fighting today in 21 century. They were really clever, without all the advantages we have today, unfortunatelly for us.
But, let’s return to the Germans Ifo data from today. Basically, Klaus Wohlrabe project the GDP fall in 2020 between 5 and 20%, depends on length of business shutdown. Todays data proves that something like that is very likely. He says that the sentiment has never fallen strongly as this in the services sector. What worries me is that Germany is the strongest Europen economy and 4th World economy based on GDP and if they project such a terrible scenarios, we could expect possibly another great depresion, after almost 100 years. The World could change dramatically because od the Corona virus, most of the people are not aware of it.