Government significantly lowers growth forecast for 2022 to 3.6 percent

Berlin The federal government is lowering its growth forecast significantly. For the current year, she only expects growth in gross domestic product (GDP) of 3.6 percent, as the Handelsblatt learned from government circles. The “Spiegel” had first reported about it. In the fall, the previous government still expected growth of 4.1 percent this year.

The forecast is part of the annual economic report, which is to be decided in the cabinet on Wednesday. According to information from the Reuters news agency, the government also comments on inflation there. Accordingly, this will be 3.3 percent in the current year – calculated for the year 0.2 percentage points above the previous year’s value.

The Institute for Economic Research Halle (IWH) is the most pessimistic with 3.5 percent growth for 2022, according to the Kiel Institute for the World Economy (IfW) there are slightly better prospects with four percent.

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Whereas the institutes had previously expected average growth of 4.8 percent for the current year, they are now expecting an average of just 3.8 percent. The revision of the forecast by the federal government is not a big surprise, but it is at the lower end of the range of revisions.

The main reason for this is probably the expectation of when the problems in international trade will resolve. Torsten Schmidt, head of the economic cycle at the Leibniz Institute for Economic Research Essen (RWI), told the Handelsblatt: “The federal government is quite pessimistic about the supply bottlenecks and does not expect the upswing until later this year.” It is not yet clear whether that will be the case .

Unclear prospects for delivery bottlenecks

The full order books in industry had given us the greatest hope for an upswing in the near future. German households have accumulated large amounts of savings over the past two years, and demand for many goods is higher than it has been for a long time. Only: They also have to be manufactured. The only thing missing is the materials – and when they are there, they are expensive.

The reason for this is the turmoil in the international supply chains that has been going on for months. Raw materials and preliminary work are missing. Whether producers of electrical goods, furniture, clothing or toys, they all lack materials. IfW head of economic activity Stefan Kooths said: “Especially in industrial production” the supply bottlenecks hindered the upswing.

According to the Ifo, 74 percent of companies complain about bottlenecks in preliminary products and raw materials. The difficulties have already cost more than 40 billion euros in added value so far – according to the Ifo, another 40 billion could be added this year.

The different assessments between the economic researchers are primarily based on the question of when the turnaround will come in 2022. It seems clear that a two-part year is imminent. The German economy is currently even shrinking in view of the delivery bottlenecks.

RWI economist Schmidt says: “The economic slowdown in the fourth quarter of 2021 will now continue in the first quarter.” With the expected decline in the number of corona infections in spring and a gradual resolution of the delivery bottlenecks, there is hope that the big upswing will finally come will come.

In 2021, the German economy grew by 2.7 percent after the forecasts had been significantly higher in advance. This could not compensate for the 4.6 percent slump in the first year of the Corona crisis, 2020.

At 3.6 percent, the government forecast is very close to that of the IWH. The Halle economists expect that Germany will only return to its pre-crisis level towards the end of the second quarter.

According to the Federal Government, the recent surge in inflation will not fall in 2022. On average, it should be 3.3 percent – ​​after 3.1 percent last year, reports the Reuters news agency. A higher annual rate was last determined in 1993 at 4.5 percent.

Biontech factor can still make changes

A statistical special effect is causing further ambiguity in the forecasts. According to various economists, the vaccine producer Biontech accounted for almost a fifth of German economic growth in 2021. It is estimated that Biontech alone accounted for 0.5 percentage points of the 2.7 percent growth last year.

The Federal Statistical Office published data on GDP growth last week, but this is only an initial estimate. The authority confirmed that Biontech was fundamentally included in the statistics and had a major influence.

However, the office cannot provide detailed information on individual companies. Since most of Biontech’s income comes from license fees from business partner Pfizer, posting it in the official statistics is complex.

It’s not clear whether the royalty payments will flow fully into 2021 GDP or if they’re still a factor for the current year. Schmidt estimates: “The posting of the Biontech license income will lead to a revision of the GDP quarterly rates, which will change the economic picture somewhat.” This also causes a certain degree of uncertainty in the interpretation of the government forecast.

More: Expensive energy drives producer prices to record levels.

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