FRANKFURT (Reuters) – Germany’s economy likely contracted in the fourth quarter as manufacturing suffered from bottlenecks and consumption from new coronavirus fears, the Bundesbank said in a monthly report released on Monday.
Growth in Europe’s largest economy stalled in the fall as supply shortages and shipping bottlenecks dampened its large industrial sector while consumption held up relatively well.
But towards the end of the year, household spending was hurt by fears over the Omicron variant, which forced companies to reinstate restrictions on their activities.
“The behavioral adjustments and containment measures triggered in some cases had a significant impact on economic activity in the services sector, especially in December,” the Bundesbank said.
“Germany’s real gross domestic product is expected to have fallen slightly in the last quarter of 2021.”
The outlook for the current year, however, seems to be brightening thanks to strong growth in industrial production, helped by the reduction of supply bottlenecks. In January, manufacturing activity reached its highest level in five months, according to the latest PMI indices published on Monday.
The outlook for inflation may be slow to improve, however, the Bundesbank added, warning that price growth would remain “unusually high” at the start of 2022 due to soaring energy costs and bottlenecks. in deliveries.
In December, inflation in Germany reached 5.7% and the Bundesbank estimates that it will exceed the European Central Bank’s 2% target until at least 2024.
(Report Balazs Koranyi; French version Dagmarah Mackos, edited by Blandine Hénault)
Copyright © 2022 Thomson Reuters