February 29, 2020 / 11:21 PM / a month ago

Germany has means to respond if coronavirus sparks economic crisis: finance minister

FILE PHOTO: German Finance Minister Olaf Scholz of the Social Democratic Party (SPD) speaks during an interview with Reuters in Berlin, Germany, February 19, 2020. REUTERS/Annegret Hilse/File Photo

BERLIN (Reuters) - Germany would be in a position to enact a fiscal stimulus package should the coronavirus spark a global economic crisis, Finance Minister Olaf Scholz said in remarks published on Sunday.

The spread of the virus has raised fears of a pandemic. In Germany there have been 66 confirmed cases, and a government crisis committee on Friday widened cross-border travel guidelines and canceled major international events.

“Should it come to major turmoil in the global economy because world markets and production centers become affected, we have all the means to act fast and decisively,” Scholz told Welt am Sonntag newspaper. “Our fiscal policy is built on a solid footing so that we can deal with a major economic crisis with full force.”

The German economy, Europe’s biggest, has been weakening as its export-oriented manufacturers languish in a recession. There are fears the coronavirus outbreak could sink Germany into a recession, given the economy’s reliance on exports and Chinese supply chains.

Chancellor Angela Merkel’s right-left government has resisted calls to take on new debt to finance a fiscal stimulus to revive a stalling economy. Any decision to unleash a fiscal stimulus would need approval from both Merkel’s conservatives and their Social Democrat (SPD) junior coalition partners.

The SPD’s Scholz said: “If the situation demands that such a stimulus is necessary, we have the means to introduce a fiscal stimulus program.”

Earlier this week, Economy Minister Peter Altmaier said Germany may introduce tax breaks to cushion the effect of the coronavirus should the epidemic worsen.

Reporting by Joseph Nasr; Editing by Leslie Adler

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