German manufacturers boosted production just before the global coronavirus epidemic hit export demand and disrupted supply chains. The country’s industrial production grew by 3% in January, marking its highest growth in the last two years. The data signal that Europe’s largest economy has begun to recover after last year’s problems before new risks emerge. Now, more and more companies in the service sector are reporting problems with their operations and orders as the epidemic continues to spread worldwide.

A key focus of analysts this week will be Europe’s response to the epidemic as central banks and governments in hard-hit regions around the world try to help their economies. Authorities in Germany have loosened the rules for short-term job compensation and said they would increase their investments after the Italian government expanded its spending significantly and the European Central Bank signaled it would increase its incentives.

The Governing Council of the ECB will hold its next meeting on Thursday, and economists are divided over what action the institution can take after more than half a decade of unconventional politics.

The German Ministry of Economy has warned that while the country has stabilized in recent months due to increased orders and improved confidence, the emergence of the virus has created new risks for forecasts.