Friday 29 October 2021
Delivery bottlenecks cloud the prospect
German economy is only slowly recovering
Consumers’ willingness to spend ensures that the German economy continues to grow. The industry, on the other hand, is still suffering from delivery bottlenecks. The prospects for the coming months are therefore gloomy. Another forecast is raised instead.
Despite delivery bottlenecks, the German economy remained on a growth path in the third quarter. The gross domestic product (GDP) rose by 1.8 percent compared to the previous quarter, boosted primarily by consumer spending. However, in a pre-crisis comparison, GDP is still in the red. Compared to the fourth quarter of 2019, the period before the start of the Corona crisis, GDP in the third quarter of 2021 was 1.1 percent lower.
In the period from July to the end of September, economic growth was mainly driven by consumer spending. The restrictions to combat the corona pandemic with the temporary closure of restaurants, fitness studios and shops were gradually relaxed from mid-May.
The industry, on the other hand, suffers from a shortage of materials and delivery bottlenecks, which are a consequence of the 2020 Corona crisis. Last year the demand collapsed. With the economic recovery, global demand is picking up again. Raw materials and intermediate products such as semiconductors are scarce and have become significantly more expensive. Despite well-filled order books, some companies have to cut production.
Federal government lowers growth expectations
The federal government and economists therefore expect the economic recovery to slow significantly towards the end of the year. This year, in view of the current supply bottlenecks and high energy prices around the world, the hoped-for “final spurt” will not come, said the Executive Minister for Economic Affairs Peter Altmaier (CDU) recently. He spoke of a historically unique shortage of intermediate goods.
The federal government lowered the growth expectations for 2021. After the corona-related collapse in gross domestic product in 2020, the government expects economic output to increase by 2.6 percent this year – in April an increase of 3.5 percent was predicted. Economic growth of 4.1 percent is now expected for 2022 instead of the previous 3.6 percent.
Leading economic research institutes had also lowered their economic forecast for this year significantly. They expect economic growth in Europe’s largest economy of 2.4 percent.