Private consumption had picked up pace after the gradual relaxation of the corona restrictions in the spring.
(Photo: dpa)
Berlin German industry has lowered its economic expectations for the current year. Despite the strong growth in the second quarter, the economic recovery in 2021 will be somewhat weaker than expected in June, according to the quarterly report published on Monday by the Federation of German Industries (BDI). The association is now anticipating an increase in economic output for the year as a whole by three percent after adjustment for prices (real). Most recently, the BDI had assumed an increase of 3.5 percent.
“The reason for our correction is the expected stagnation in private consumer spending in 2021,” explained BDI Managing Director Joachim Lang. It is true that private consumption, an important pillar of the German economy, picked up speed after the gradual relaxation of the corona restrictions in the spring.
However, that was not enough to prevent an overall decline in the first half of the year. According to the BDI, private consumer spending fell by two percent in real terms in the first six months compared to the same period in the previous year. The previously forecast annual growth rate of one percent is therefore no longer achievable.
According to the BDI, Europe’s largest economy is being driven by booming exports. The industry association continues to expect an increase in exports of goods and services by 8.5 percent in real terms.
Top jobs of the day
Find the best jobs now and
be notified by email.
Trade with the EU partner countries and the USA is going extremely well. Business in China is showing somewhat lower growth rates. The increase in exports is not an automatic mechanism for a sustained economic boom, warned Lang against too high expectations. “Problems in global supply chains, high logistics costs and unresolved trade disputes are darkening the economic sky.”
In its forecast, the BDI assumes that a large part of the population will have received vaccination protection by the end of the year and that possible pandemic-related precautionary measures will no longer impair economic activities. In this case, economic output could rise to pre-crisis levels in the fourth quarter.
More: Post-corona boom fails – the next government has a difficult way back to normal