Economic research institutes in Germany have significantly lowered economic expectations. They now expect Gross Domestic Product to grow by 2.4 percent in 2021, following a 3.7 percent forecast in the spring.
In the view of major economic research institutes, growth in Germany this year will be significantly slower than originally expected.
In their autumn report published on Thursday (October 14th), experts forecast a 2.4 percent increase in Gross Domestic Product. In the spring of this year, after the downturn caused by the crown in the economy in 2020, the institutes were still expecting a growth of 3.7 percent. In 2020 as a whole, Gross Domestic Product fell by 4.9 percent.
Supply difficulties weigh on the economy
The economic situation continues to be burdened by the corona crisis, in addition to supply difficulties, the explanation said. The crisis is gradually being overcome. “However, in the manufacturing sector, supply difficulties for intermediate products are hampering production, so only the consumer-related service sectors are growing.” Moreover, due to the ongoing pandemic, “a full normalization of contact-intensity activities is not expected in the short term.”
Therefore, the German economy is unlikely to “return to normal capacity utilization” by 2022, researchers predict. For 2022, they expect significant economic growth of 4.8 percent. In the spring, they still forecast a plus of 3.9 percent next year – they thought the economic recovery of the German economy after the election would be postponed.
Lack of raw materials is another problem
Some economists and business associations have lowered their forecasts in recent weeks. The situation is also aggravating Germany’s significant exports, which lost momentum in August. For the first time since May 2020, companies exported less abroad than a month ago, the Federal Bureau of Statistics reported last Friday based on preliminary data. However, exports were still above the pre-crisis level of February 2020. “Rising commodity prices and a lack of containers are making international business more difficult, causing prices to skyrocket for all market players,” he said. describes the current situation Dirk Jandura, president of the German Foreign Trade Association (BGA).
At the same time, the lack of raw materials is causing problems for enterprises. The Federation of German Industries (DUI) has stated: “Problems in global supply chains, high logistics costs and unresolved trade disputes are obscuring the economic sky and resulting in a massive impact on exports.”
The so-called joint diagnosis of institutes is prepared twice a year, in spring and autumn – by the German Institute for Economic Research, the Ifo Institute, the Institute for World Economy, the Leibniz Institute for Economic Research in Halle and the RWI – Leibniz Institute for Economic Research in Essen ./DW
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