Sunday April 25, 2021
Is the boom coming?
Economists see economy in the “starting blocks”
The economy is two-pronged: industry is booming despite the lockdown, and the service sector is starving. What’s next? For the spring, economists see good opportunities for a strong recovery in all sectors. However, it is said that the course still has to be set for this.
Thanks to the strong demand from the USA and China for industrial products Made in Germany, the economy in Germany is holding up well despite the ongoing corona lockdown. While the service industry continues to suffer, the industry is currently booming, as it was before the Corona crisis. Until the end of the lockdown measures, leading economic and financial organizations continue to assume that the economy will be divided into two parts, according to a dpa survey.
There could be a real boom as soon as the pandemic is under control: “We expect a strong recovery in the second quarter. Foreign demand, especially from China and the USA, is already driving the positive development in the industry and is developing very positively”, said the “economy” Veronika Grimm.
“In the USA, retail sales went up by almost ten percent after the reopening,” said Katharina Utermöhl from the Allianz Group. There are also the first signs of a spring recovery in the German service sector. “You are in the starting blocks,” said Utermöhl in view of the first signs of new hires even in the catering industry.
“Setting the course for the upswing”
“In the next few months it will be important to set the course for a successful upswing,” said Fritzi Köhler-Geib, chief economist of the state-owned KfW Group. However, there are also warning voices – the pandemic should not be shelved too quickly.
“If we don’t take further action, there will be a ‘yo-yo effect'”, warned Grimm. “It takes more than an emergency brake to get the number of infections under control. It takes progress in vaccination and compulsory testing in companies, which should be implemented consistently,” said the professor at the University of Erlangen-Nuremberg.
The labor market is currently proving to be an anchor of stability – also because of the fact that there are still almost two million people who are spared unemployment through the instrument of short-time working with state aid. Marc Schattenberg, an economist at Deutsche Bank, even expects the labor market to pick up in spring. Seasonally adjusted, the number of unemployed will fall by 12,000 in April, he forecast. The Federal Employment Agency will publish its April statistics on the labor market next Thursday (April 29).
However, both Köhler-Geib and Grimm called for greater emphasis on qualification in the companies. “Over 3 million employees and 1.4 million unemployed have no professional qualifications,” said the KfW chief economist. “Qualification is the most promising way to enable employees in the lower wage groups to have higher incomes and to open up further prospects for short-time workers.”
Grimm fears long-term negative effects on the economy from the educational misery caused by the pandemic. “What we are currently neglecting in terms of education, the students we are losing, will keep us busy for some time and have significant long-term effects on growth,” she emphasized.