Tuesday, December 14, 2021
Worry about recession in winter
The recovery of the economy is becoming more and more distant
From Max Borowski
Most economists are still certain: The Corona crisis will be followed by a strong upswing. But when? For the time being, the economy is stagnating or shrinking. There are also considerable risks in the hopeful prognoses for the coming years.
Now it will probably be one and a half percentage points less in the coming year. For months it has been the same game with economic forecasts: the strong economic upswing originally forecast by economists for this year is shifting backwards from forecast to forecast and is shrinking more and more. At the height of the first corona wave in May 2020, the Munich-based Ifo Institute once expected German GDP to grow by a staggering 10.2 percent in the following year 2021. But not much of that remains.
A few months later, this optimism proved untenable, and the forecast was initially cut to 6.4 percent. Then again, and again to only 2.5 percent growth for the German economy in the full year 2021. The same development can be traced in the forecasts of all well-known economic research institutes. The reasons: neither the course of the pandemic itself with the third and fourth wave of infections in Germany and the corresponding countermeasures were not expected by anyone. But also the indirect corona effects on the global economy, including above all bottlenecks due to disruptions in the supply chains and exploding energy prices, turned out to be more violent and longer-lasting than feared.
Now, in its current economic forecast, the Ifo Institute has also lowered its growth expectations for the coming year for the first time. According to economists, the post-crisis upswing is unlikely to begin until the second half of 2022. Germany’s economy will stagnate in the winter half of 2021/2022. Other economists even fear a recession. This means that economic output will decline twice in a row in the last quarter of 2021 and in the first quarter of 2022. “More than ever, I expect the German economy to shrink in the winter half-year,” said Commerzbank chief economist Jörg Krämer to Reuters, when the federal and state governments tightened the corona rules, among other things, and thus finally reconciled the hope of one for many industries Annual accounts took.
And then? Most economic researchers maintain that the promised upswing has only been postponed, not canceled. “The strong recovery initially expected for 2022 will be pushed back further,” says Ifo economic director Timo Wollmershäuser. GDP is expected to grow by 2.9 in 2023, almost twice as much as previously forecast.
But how much is this forecast worth considering the disappointing development of the past few months? According to Wollmershäuser, the expectation of increasing GDP growth for the coming years is based on the assumption that “in the summer half of 2022 [..] with the ebb of the corona wave and the gradual end of the delivery bottlenecks, a strong recovery will begin “. This is exactly how the economists who originally presented for this year had until new waves of pandemics came and the delivery bottlenecks continued to worsen. This means that the Hope and the risks for the economy will remain the same in the years to come.