Germany Sees Delayed Economic Revival as Supply Squeeze Bites
Germany Trims 2021 Forecast as Supply Squeeze Hampers Growth
(Bloomberg) --
Germany expects growth this year to be significantly weaker than predicted, before Europe’s biggest economy shakes off the lingering effects of the pandemic and a supply squeeze and expansion accelerates in 2022.
The cut in the government’s 2021 outlook to 2.6% -- compared with a prediction of 3.5% at the end of April -- is a result of supply bottlenecks for products like microchips and construction materials, as well as rising energy prices, particularly for gas, Economy Minister Peter Altmaier said Wednesday in Berlin.
“The lack of chips has meant that hundreds of thousands of cars cannot be finished and delivered,” he said at a news conference. “So it’s important that we make sure that international supply chains are maintained and revived.”
German output will likely return to its pre-pandemic level by the end of March, one quarter later than expected, Altmaier predicted. Experts from his ministry raised their forecast for 2022 GDP growth to 4.1% from 3.6%, and expect that growth will “normalize” at a rate of 1.6% in 2023.
The government’s forecast for this year is slightly more upbeat than joint predictions published this month by the nation’s leading research institutes, while its outlook for next year is significantly less optimistic. The institutes cut their 2021 outlook to 2.4% from 3.7% and raised their 2022 estimate to 4.8% from 3.9%.
The economy ministry’s twice-yearly forecasts help guide budget planning, and these are almost certainly the final ones to be prepared by the current government under Chancellor Angela Merkel.
Finance Minister Olaf Scholz, who led his Social Democratic party to victory in last month’s election, is aiming be confirmed as Germany’s new chancellor in early December at the head of a coalition with the Greens and the business-friendly FDP.
“The new government will certainly give thought to which measures it can take to offset price increases for heating, for transport and for electricity for those who are most affected,” Altmaier told reporters.
“That is partly companies and partly pensioners and people with low incomes,” he added. He also said he expects inflation to lose steam early next year as energy prices decline again.
©2021 Bloomberg L.P.