World Forests during the Pandemic: Germany

Germany is going to give substantial help to its economy: the total fiscal measures declared by the authorities are worth €1.3 trillion (which is 37% of its GDP). Funds will be directed to help small businesses: all enterprises employing up to 5 people will get a one-time sum of up to €9,000 for the next three months. Firms with up to 10 employees will receive €15,000. The money is intended, first of all, to cover payments for rented premises, leased equipment, and loans.

According to tentative forecasts, the German economy may slide into a slight recession with -0.3% in 2020. The construction sector may lose 0.4% in investments (up to €323 billion) and 0.5% in the volume of construction output (up to €428 billion). The Central Association of German Construction Industry (ZDB) reported that about 100,000 workers haven’t managed to enter the country. Large construction projects are falling through and can be postponed.

Business Climate Index fell to 86.1 points in March, after 96.0 points (seasonally adjusted) in February. This is the strongest decline ever recorded in reunified Germany and the lowest since July 2009. In particular, companies’ expectations of future business activity deteriorated immensely. The assessments of the current situation have also dropped significantly.

In manufacturing, the index fell – across all branches of industry – to the lowest overall level since August 2009. The decline in expectations is historically unique with a view to 70 years of industry surveys, reports the institute. The indicator of the current situation fell less sharply. Many companies have announced production cuts.

Timber companies are trying to save contracts amid economic malaise. However, unilateral cancellation of orders, extension of payment deadlines, or introduction of additional conditions undermine the stability of the industry. The German timber industry HDH, advocates additional protection for commercial credit insurance.

The German Sawmill and Timber Industry Federation (DeSH) reports that the pandemic has already affected 70% of sawmills. Germany’s forestry is still experiencing a comedown from natural disasters of 2018-2020: storms, droughts, fires, and contamination by forest bark beetles, which have damaged about 160 million m3 of wood. Huge volumes of blown-down wood still remain in collecting depots and cannot be hauled, and the quality of raw materials is starting to deteriorate. The forecasts for 2020 are also disappointing: due to the mild winter, the situation with bark beetles will only intensify in the spring time to come.