German economy may shrink by 10% in 2020 due to coronavirus: Economists

The industrial sector would be hit harder with an 18% decline, the German Economic Institute pointed out.

The German economy could shrink by 10% this year due to coronavirus in a worst case scenario whereby the lockdown continues until the end of June, the German Economic Institute (IW) predicted on Thursday.

"The industrial sector would be hit harder with an 18% decline. In this case, the crisis could continue until the end of the year," IW said.

German parliament passes 1.1 trn euro virus rescue package

Germany's parliament voted through Wednesday a package of measures worth almost 1.1 trillion euros ($1.2 trillion) to shield Europe's largest economy from the impact of the coronavirus pandemic.

Scattered sparsely throughout the chamber to limit the possibility of infection, MPs agreed 156 billion euros of new borrowing, backing up a broadside of support to business and the health system as well as hundreds of billions in guarantees for bank loans to firms.

Germany's unprecedented support package began racing through the legislative process the same day Republican and Democratic leaders in the United States Senate announced a deal on a never-before-seen $2 trillion relief programme for the world's top economy.

"Please keep in mind the rules on keeping your distance!" parliament president Wolfgang Schaeuble urged MPs between votes as they moved around the historic Berlin chamber.

The new borrowing blasts through a financial-crisis-era constitutional rule drastically limiting budget deficits.

Berlin will create an "economic stabilisation fund" offering 400 billion euros in guarantees for companies' debts, 100 billion euros for lending to or taking stakes in firms and 100 billion euros in support for state-owned investment bank KfW.