Economy: Federal government wants to lower forecast

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Delivery bottlenecks, but also the pandemic, are having a negative impact on the German economy.

(Photo: dpa)

Berlin The federal government apparently wants to lower the economic forecast for this year significantly. According to information from the German press agency and the Reuters news agency, only 2.6 percent growth in gross domestic product in Germany is expected for the current year. In April, the government had expected an increase of 3.5 percent.

According to dpa and Reuters, the federal government expects growth of 4.1 percent for 2022 instead of the previous 3.6 percent. The outgoing Federal Economics Minister Peter Altmaier (CDU) will present the federal government’s autumn projection this Wednesday in Berlin. The Ministry of Economic Affairs declined to comment on Reuters’ request and referred to tomorrow’s press conference.

According to Reuters, the numbers should then normalize in 2023 – with an expected growth of 1.6 percent. For the traffic light coalition, which, according to the plans of the SPD, Greens and FDP, should be in place at the beginning of December, the forecasts could mean increasing tax revenues.

You need a growing economy to fund the mammoth investments you plan to make. “We want to give the economy a boost through super depreciation for investments in climate protection and digitization,” says the Ampel partners’ exploratory paper.

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The reasons for the weaker outlook this year are the consequences of the corona pandemic, industrial supply bottlenecks, shortages of raw materials and high energy prices. For this reason, the leading economic research institutes recently lowered their joint estimate for 2021 to 2.4 percent. In the spring they had assumed 3.7 percent. For 2022, they raised their forecast from 3.9 to 4.8 percent, while they expect an increase of 1.9 percent for 2023. In the Corona year 2020, the gross domestic product (GDP) collapsed by 4.6 percent.

Economists expect inflation to ease

According to a Reuters insider, the federal government expects exports to grow by 8.6 percent in 2021. In 2022 it should then be 6.3 percent, in 2023 3.7 percent. In 2020 exports fell by 9.3 percent.

Economists expect inflation to ease. Due to higher energy prices, the rate of inflation this year, at an average of 3.0 percent, is likely to be as high as it has been in 27 years. In the coming year, however, it should fall to 2.5 percent and in 2023 to 1.7 percent.

In September consumer prices rose by 4.1 percent, the fastest they have been since 1993. This was also ensured by a number of special effects – such as the extremely low starting level for raw material prices, pandemic and lockdown-related catch-up effects or the temporary VAT cut in the fight against the corona crisis in the second half of 2020.

According to the Reuters Insider, the federal government is forecasting an increase of 2.9 percent in consumer spending by private households this year, and 2.2 percent in 2022.

More: IMF warns of “significantly higher inflation”

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