German Chancellor Angela Merkel, citing experts, said that up to 70 per cent of the population could be infected by the new coronavirus and insisted on the necessity of measures to slow its spread.
The government has recommended the cancellation of all events with more than 1,000 people, among other things.
"It is an extraordinary situation, we will do what's necessary and luckily Germany is relatively robust... we will do what we can to get through this situation well, and we will see at the end of that where our budget stands," she said, stressing that ending the virus crisis "comes first".
Merkel on Wednesday signalled that she is even ready to suspend the cherished dogma of keeping Germany's budget balanced.
Maintaining a balanced budget or a "black zero" budget, Germany adopted to tackle a fast ageing nation and its shrinking workforce, has been a key selling point of Merkel's government. "Our solidarity, sensibility and our hearts are being put to the test," she said, stressing that it was key to "win time" for a cure or a vaccine to be found before health systems are stretched beyond capacity.
With the outbreak of the coronavirus, countries have been forced to shut borders and companies have been asking people to work from home to stay at home. Foreign orders have collapsed in an economy that relies heavily on exports. This has led to companies calling on Merkel's government for help.
Merkel also said that even if severely affected nations like Italy was to flout EU"s rules of limiting budget deficits, she was prepared to look the other way.
"On the European level regarding the stability and growth pact, we will be flexible. With three deaths and the number of infections pushing close to 1,300, Merkel's government has called for the cancellation of large events with more than 1,000 people.
The Berlin ITB travel fair or the Hannover Messe industrial show has been shuttered. The virus outbreak has also affected the cultural scene in Germany with classical concerts and operas are being shuttered.
Post the press conference announcing the restrictive measures to tackle the coronavirus, the nation's biggest daily, Blid accused her of failing to take charge in the crisis. Merkle shrugged off the criticism.
During the press conference, it was also announced that government is working hard through the rules to ease compensations regulations for affected employees in a bid to cushion the blow on workers forced to cut work hours because of crashing demand and production bottlenecks.
