Wednesday October 27, 2021
No final spurt in the economy
Altmaier holds out the prospect of strong growth for the new government
Delivery bottlenecks and high energy prices are slowing down the economic catch-up for the time being. For 2022, however, the federal government expects a strong upturn. Then the inflation rate eases again, says the managing minister of economics Altmaier.
The federal government does not expect a strong economic upturn in Germany until next year. However, she lowered her growth expectations for 2021. After the corona-related collapse in gross domestic product in 2020, the government expects gross domestic product to increase by 2.6 percent this year – in April an increase of 3.5 percent was predicted. For 2022, the federal government is now expecting growth of 4.1 percent instead of the previous 3.6 percent.
The acting Minister of Economic Affairs Peter Altmaier said in Berlin that Germany was back on the growth path after the Corona crisis. In view of the current delivery bottlenecks and high energy prices around the world, the hoped-for “final spurt” will not come this year. In the coming year, the economy will gain significant momentum.
The economic catch-up is slowed mainly by delivery bottlenecks. Altmaier spoke of a historically unique shortage of intermediate goods. The demand for German products on the world markets remains high: “If the delivery bottlenecks gradually resolve, there will be a clear catch-up effect in 2022.”
Pre-crisis level in prospect
According to the forecast of the federal government, the German economy will reach and exceed its pre-Corona level again by the end of the first quarter of 2022. “A quarter later than originally assumed,” said Altmaier. “The prerequisite is, of course, that the growth path is not stalled in the next few months.”
The federal government also expects the inflation rate to reach a significantly lower level again by the turn of the year 2021/22 – because special factors will then no longer apply, such as the withdrawal of the temporary VAT cut in the second half of 2020. This is now fully reflected in inflation. The regular VAT rates have been in effect again since January. Goods and services therefore tend to become more expensive. In its autumn projection, the federal government expects inflation rates of 3.0 percent in 2021 and 2.2 percent in 2022. In September, the inflation rate was 4.1 percent, fueled primarily by higher energy costs.
However, Altmaier warns of increasing numbers of corona infections. These could dampen the upswing – even without a new lockdown. “We have a second pandemic winter ahead of us,” says the CDU politician. He assumes that new lockdowns can be dispensed with. The high number of infections could, however, “lead to negative economic effects”. It is therefore important to continue to wear masks and to observe precautionary rules.