Germany

Market overview

All retailers in Germany are now permitted to reopen, regardless of size, provided social distancing and hygiene measures are in place. Restaurants and tourist accommodation has also largely reopened across the country. Some states are beginning to allow the re-opening of pubs and bars, although clubs remain closed.

Germany's existing contact restrictions have been extended until 29 June, but have been slowly relaxed to allow more people to meet up.

Given Germany's federalised system, it is up to its sixteen individual states to implement COVID-19 control measures. Four states (including Bavaria) have imposed more wide-ranging restrictions on movement.  

All retailers in Germany are now permitted to reopen, regardless of size, provided social distancing and hygiene measures are in place. Restaurants and tourist accommodation has also largely reopened across the country. Some states are beginning to allow the re-opening of pubs and bars, although clubs remain closed. 

Germany's existing contact restrictions have been extended until 29 June, but have been slowly relaxed to allow more people to meet up. 

Given Germany's federalised system, it is up to its sixteen individual states to implement COVID-19 control measures. Four states (including Bavaria) have imposed more wide-ranging restrictions on movement. 

For more information on doing business in Germany, visit myNZTE - our free online portal for curated, in-depth information and guidance. 


Economy and trade

The German economy has been hit hard by the pandemic, but Deutsche Bank Research argues that Germany's recovery will be one of the fastest among industrial countries.

The German federal government is anticipating a 5% drop in GDP, whereas the Ifo Institute in Munich has the most pessimistic prediction of a decrease up to 20% if major economic disruption continues for three months or more. Read an English-language summary of the Institute's detailed report here.

After reaching record lows in recent months, German business and exporter confidence is beginning to grow. The Ifo Business Climate Index rose to 79.5 points in May, with the gradual easing of lockdown measures offering businesses hope.

Sector impacts

Germany's short-time compensation scheme (Kurzarbeitergeld) will make it easier for companies to retain workers instead of laying them off. The Government has relaxed requirements for companies applying for this compensation.

The ifo Institute predicts that the key industries that will be impacted by lower staff demand, and will therefore utilise Germany's short-time compensation scheme, will be automotive (41%), mechanical engineering (33%) and electrical engineering (32%).

Supply chain, logistics and freight

Ports

German ports are operating as usual, but Bremen and Hamburg ports have lower efficiency due to a reduction in manpower.

Customs controls

Germany has dropped its requirement to seek permission to export personal protective equipment (PPE), but only for exports to other EU or European Free Trade Association countries. This relaxation came in response to agreement on an EU-wide export authorisation regime, under which only PPE exports outside the EU still require approval from the relevant member state.

International supply chain

Germany's Federal Ministry of Economy and Energy has set up a Supply Chain contact point for German companies which are experiencing international supply chain problems. The contact email is kontaktstelle-lieferketten@bmwi.bund.de .

Government support

The German Minister of Finance announced an economic rescue package summarised below. More detail on the various scheme for companies can be found on the Federal Government webpage here.

  • Short-time compensation (Kurzarbeitergeld): companies that put their workers on reduced hours as a result of the coronavirus outbreak receive state support to compensate workers. It is paid at the same level as the unemployment benefit, which compensates for 60% of normal income (or 67% if an employee has children). Employers can then return them to full capacity when the market stabilises. Amendments have been made to the scheme to make it easier for German companies. These include: lowering the minimum of affected workers in a firm to 10%; partial or complete removal of negative work hours balances; short-time compensation extended to temporary workers; complete coverage of social security contributions through the federal labour agency. Social security contributions will be reimbursed in full by the German Federal Employment Agency. You can read more about this scheme here.

  • Liquidity support for firms through tax relief: companies defer tax payments, and make reduced advanced tax payments, with reduced enforcement measures until the end of the year. More specifically, tax authorities will be able to approve delayed payments if a company would face "significant hardship" if forced to pay. More information is available here.

  • Unlimited-size loans to companies and businesses affected by COVID-19: The German Government is providing these liquidity assistance programmes by easing conditions for KfW (the German state development bank) loans and launching additional special KfW programmes. The KfW Programme launched on 23 March and you can read more about the loan conditions here.

Further support and a supplementary budget worth up to €600 billion was announced by the Bundestag. This includes:

  • €50 billion to help small businesses (under 10 employees) by granting emergency aid direct payments of up to €15,000.

  • €400 billion for loan guarantees to secure corporate debt beyond the liquidity programmes already in place.

  • €100 billion in possible credit to the KfW for its loans to struggling businesses.

  • €100 billion for potential Government purchases of direct equity stakes in companies as a way to prevent bankruptcy and foreign takeovers.

Taken together, Germany's extra budget, economic stabilisation fund and other direct payment and guarantee measures will potentially total approximately a third of German GDP.

Advice to exporters

In terms of immediate activity, make the safety and wellbeing of teams your priority, and invest as needed to ensure a safe and healthy working environment. Many businesses are still allowing employees to work from home where this is possible. Check in with your business partners and see how they are doing and how you might be able to support them during this time.

Consumer sentiment

McKinsey has carried out a survey on Germans during the COVID-19 crisis. The survey found that German consumers are concerned about the economy during the crisis, but less so than their neighbours.

  • Compared to other European countries, German consumers are most optimistic about a quick economic recovery. Only 15% think COVID-19 will have a long-lasting impact on the economy

  • However, nearly a third of Germans are reducing their spending and over two-thirds believe their finances will be impacted for more than two months because of COVID-19

  • This has led to decreased spending expectations across all categories except grocery and entertainment at home

  • The main concerns for Germans are the uncertain length of the pandemic, public health and the German economy.

Business responses

Operations

The German Chamber of Commerce and Industry has provided guidance for what companies should pay attention to in regards to business operations. The Government has also created a business hotline for companies with Coronavirus queries (030 18615 1515).

A survey by the Federal Ministry of Economics found that more than a third of companies have expanded their product or service range in response to COVID-19 and are increasingly using digital sales channels.

Business trends

The pandemic has pushed German companies towards more digitalisation and rationalisation, which is being supported by the federal government.

As part of its most recent stimulus package, the government will invest over €10 billion in digital infrastructure (including 5G rollout and uptake), artificial intelligence and e-government solutions.

DIHK has published a survey which examines how German industries and related business services have been affected by the pandemic and how they are adapting. Here are some highlights from a New Zealand business perspective:

  • Businesses are expecting declining revenues both within Germany and from exports, with exports within the EU more affected than exports to other countries.

  • German companies are responding to expected revenue falls with investment cuts, but also by pivoting towards digitalisation and rationalisation.

  • Many German businesses are trying to find new suppliers to mitigate supply chain issues. They are mostly looking in-market and within the EU, but approximately a third are looking beyond Europe.

The survey also suggests that German businesses will be assessing future contingency risks for supply of goods and services, and that suppliers from countries seen to have effectively managed the pandemic, such as New Zealand, may have an advantage.

You can download the full report (in German) here.

Travel

Germany's border controls and restrictions, imposed in March, were lifted on 15 June. Cross-border traffic will essentially flow free again, and travellers from any EU country (plus the United Kingdom) will be able to enter Germany.

However, the German government continues to advise its citizens not to travel to 'third' countries such as New Zealand until 31 August.


Sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you'll find information on any COVID-19 effects across important sectors and industries in Germany.

Agriculture

While most rural areas are not yet significantly affected by COVID-19, German farmers are becoming increasingly worried that they may lack sufficient human resource now that the growing season has begun and the first harvests (such as asparagus and strawberries) are expected for May.

Of the nearly 300,000 seasonal workers needed each year, 95% usually come from abroad, in particular from Eastern Europe. Due to border restrictions and anxiety that other countries are facing, farmers will have to quickly recruit these workers from Germany's domestic labour market.

In response to agricultural labour issues, legislation has been passed that will allow foreign seasonal workers already in the country to work there for longer. Further regulations will facilitate labour 'leasing' from businesses outside the agricultural sector, and allow workers receiving wage subsidies and pensioners to accept temporary jobs on farms.

To support this process, the agricultural sector and the Federal Agriculture Ministry have created an online platform. Both farmers seeking support and individuals offering help can advertise for free, or respond to requests or offers already uploaded.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

Covid19.govt.nz
COVID-19 helpline for businesses
Business.govt.nz
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Immigration
Ministry of Health
WorkSafe New Zealand
myNZTE

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.