Saturday 23 October 2021
Energy prices and bottlenecks slow down
German economy has to “dress warmly”
The outlook for the German economy has deteriorated. Bottlenecks in raw materials and preliminary products of all kinds and exploding energy prices are hampering the expected strong upswing. However, according to economists, this has only been postponed, not canceled.
According to economists at leading German financial institutions, the approaching winter is causing the German economy to shiver. “The German economy will have to dress warmly in the coming months,” said Katharina Utermöhl from the Allianz Group in a survey by the German Press Agency. “We expect the autumn cooling to continue.” However, there will be no winter crash like last year, so Utermöhl. Weaker demand from China exacerbated the problem.
Marc Schattenberg from Deutsche Bank Research also sees no rapid recovery, primarily due to the high energy prices and global delivery bottlenecks, for example for microchips. “No significant relaxation is expected before the end of spring 2022.” And the chief economist of the state banking group KfW, Fritzi Köhler-Geib adds: “The rest of the recovery will be tougher than expected in the spring.” So far, it is difficult to predict how long the material shortages and production disruptions will last on the world markets. The resulting delivery difficulties and strong price increases, for example for important raw materials, delayed the growth out of the crisis.
“The dismantling of the delivery bottlenecks will not be accomplished so quickly because of the sometimes highly complex technical requirements,” said Deutsche Bank expert Schattenberg. He is now only assuming growth of 2.5 percent this year. The economic recovery will shift into next year. Then there should be growth of 4.5 percent according to his forecast. “Postponed is not canceled,” said Koehler-Geib. “Because of the need to catch up after the production losses caused by the crisis, the order books in the industry are full to the brim.”
Economists see a slowed recovery on the labor market compared to the rapid development in the summer months. “The recovery of the German labor market is likely to continue over the winter months, but will clearly lose momentum,” said Utermöhl. Nevertheless, the pre-crisis level of unemployment should be reached again by the end of 2022. Utermöhl and Schattenberg anticipate a reduction in the number of unemployed by around 60,000 in October. The Nuremberg Federal Employment Agency announces its monthly statistics for October next Thursday.