The lung disease Covid-19 has been spreading rapidly from China since the end of 2019. Millions of people worldwide have been infected with the coronavirus. In addition to the health consequences, the pandemic is causing great damage to our economy. On our theme page you will find relevant ZEW findings on the coronavirus crisis. Our researchers are analysing the threat the coronavirus pandemic poses to companies, and the increased use of remote work, among other things. In addition, we investigate economic and growth effects for Germany, Europe, China and the global economy, and evaluate the measures of the European Central Bank (ECB) in the fight against the virus.

Achim Wambach
ZEW President

Prof. Achim Wambach

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The second wave is here, and the coronavirus will not go away any time soon. We need to find better ways to encourage sustainable practices in times of the coronavirus.

Statements and Opinions

Questions & Answers

Pretty Much Every Other Mainstream App Collects More Sensitive User Data

According to information provided by the Robert Koch Institute (RKI), the coronavirus contact-tracing app has been downloaded more than 18 million times. In light of the rise in infection rates, there is hope that the app will facilitate the tracking of chains of infection in the cold winter months ahead and that it will help to control outbreaks of the virus. In the following interview, Dr. Dominik Rehse, head of the Junior Research Group “Digital Market Design”, speaks about how the app has performed up until now and what is needed in order for it to be effective in protecting individuals from infection.

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Questions & Answers

Using the Short-Term Push Towards Digitalisation for Long-Term Investments

The coronavirus has hit the world economy hard, with the lockdown having paralysed public life for weeks in many countries. But even with the lockdown easing up, hygiene and distance regulations still make it difficult to work together, shop, and use business services.

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Coronavirus Crisis: Where Do We Stand?

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Taking the right steps now to get out of the crisis in good time: ZEW President Achim Wambach on the coronavirus crisis (in German with English subtitles).

Our Experts at ZEW

Topics

Business Cycle, Financial Markets

Topics

Digitalisation, Digital Economy

Topics

EU Subjects, Federalism, Monetary Policy, Public Finance, Taxes

Topics

Firms, Firm Foundations, Innovation Policy, Insolvencies

Topics

Human Resources Management, Flexible Working Hours Arrangements, Remote Work

Economic Development

In addition to the major health risks, the extent of the economic consequences of the coronavirus for the German, European and global economy cannot yet be fully predicted. It is clear from today’s perspective that the pandemic has the potential to cause a serious negative economic shock. The economic risks are so great because this pandemic simultaneously disrupts supply and demand. As a result, there will be a dramatic decline in all face-to-face services in the affected regions. It remains to be seen to what extent the ECB’s monetary policy measures will be able to stabilise the eurozone.

Information Economy

ICT Sector Faces Economic Downturn

The economic sentiment in the information and communication technology sector (ICT) in Germany fell to a historic low in the first quarter of 2020. The ZEW sentiment indicator for the companies in the ICT sector plunged to a reading of 51.1 points as a result of the coronavirus pandemic, falling by more than 17 points compared to the previous quarter. This is the worst assessment of the economic climate and the sharpest drop recorded since the survey was started in 2011.

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ZEW Indicator of Economic Sentiment

Expectations on the Rise Again

The ZEW Indicator of Economic Sentiment for Germany increased in the current December survey, climbing 16.0 points to a new reading of 55.0 points. Economic expectations have thus largely recovered from the sharp decline witnessed in the previous month. The assessment of the economic situation in Germany worsened again, and currently stands at minus 66.5 points, 2.2 points lower than in November. The assessment of the situation thus falls slightly below the September 2020 figure (minus 66.2 points).

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China Economic Panel

Outlook for China Remains Very Positive

In the December survey (1–9 December 2020), the CEP indicator decreased by 23.7 points to a new reading of 31.3 points. Although this marks a sharp decline, expectations are still at a historically high level. The CEP indicator, based on the China Economic Panel (CEP) in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.

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Working World and Businesses in Germany

How does the coronavirus pandemic affect the way we work? Are German companies at risk? And where do we find unused potential? Our ZEW researchers show that the coronavirus crisis is changing our working world. Working from home arrangements, for example, are experiencing an unexpected boost. Furthermore, our research results show that the corona pandemic threatens the existence of companies. Many, especially smaller companies, have too low a credit rating to be able to cope with longer closures.

Research

Financial Market Experts Expect Number of Zombie Firms to Grow Due to COVID-19 Measures

Thanks to the measures adopted to mitigate the economic effects of the coronavirus, the German economy has largely stabilised. Nevertheless, financial market experts expect the number of company insolvencies and credit defaults to rise in the first half of 2021. Moreover, they assume that the number of so-called zombie companies – i.e. firms that are insolvent but artificially kept alive by loans ­– is likely to grow. These are the results of a special question featured in the most recent ZEW Financial Market Survey conducted by ZEW Mannheim in December 2020 among 174 financial market experts.

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Research

The Federal Government Is Not Taking Full Advantage of Its Possibilities

The Second Coronavirus Tax Assistance Act is not ambitious enough to cushion the effects of the crisis. In the way the measures are currently designed, particularly small companies benefit little from the tax reliefs. Relative to the severity of the crisis, the measures are, overall, too soft and not innovative enough. “With the Second Coronavirus Tax Assistance Act, legislators will achieve a fast, but rather modest boost,” concludes ZEW Research Associate Professor Christoph Spengel, who holds the Chair of Business Administration and Taxation II at the University of Mannheim. “The measures fall short of what is necessary to address the severity of the crisis. The coronavirus crisis is hitting the German economy harder than the financial crisis did. It would therefore be appropriate to introduce more far-reaching measures.”

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Research

Companies Plan to Keep Remote Work Arrangements After Crisis

In light of the changes to organisational processes that businesses have had to make due to the COVID-19 pandemic, many firms have realised that there are more tasks that can be carried out from home than previously expected. In the business-related services sector, more than 50 per cent of companies – and in the manufacturing sector, more than 40 per cent – are reporting such digital learning effects. “The widespread recognition among firms that many more tasks can be performed remotely than previously assumed reinforces the impulse the coronavirus crisis is giving to increasing mobile work. Because of these new experiences and insights, many companies are planning to use remote work more regularly after the crisis than they did before,” says Dr. Daniel Erdsiek, a researcher in ZEW’s “Digital Economy” Department.

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Research

High Level of Digitalisation Can Help Overcome the Crisis

The coronavirus pandemic is having a major impact on the economy, with solo self-employed workers being particularly hard hit by the crisis. In a ZEW expert brief based on a survey among more than 16,000 full time self-employed individuals without employees, researchers analysed how these workers are affected by the coronavirus pandemic and in which ways digitalisation can help overcome the crisis.

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