Ifo Cuts German 2021 Growth Forecast on Supply Bottlenecks
Germany’s Ifo Institute cut its 2021 growth forecast to 3.3% from 3.7% as supply chain bottlenecks hold back momentum in Europe’s largest economy.
Output will then expand by 4.3% in 2022, up from a previous forecast of 3.2%, it said in a report on Wednesday. The Ifo Institute reckons that the overall cost of the pandemic crisis for Germany’s economy amounts to 382 billion euros ($463 billion) for the period from 2020 to 2022.
“The main factor dampening growth in the short term are the bottlenecks in the supply of intermediate products,” said Timo Wollmershaeuser, who heads the institute’s forecasts division. “Reopening business triggered a strong recovery, but this is now getting pushed back a bit further than we thought in the spring.”
Germany’s economy has fared relatively well during the crisis compared to the rest of Europe, in part due to its strong reliance on manufacturing. Recent surveys, however, have shown the service sector driving the recovery as pandemic restrictions are lifted and factories grapple with unprecedented supply-chain issues amid shortages of parts and raw materials.
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