The researchers are raising their forecast for the year 2022.
(Photo: imago images / Arnulf Hettrich)
Munich, Berlin The Ifo Institute is lowering its forecast for the growth of the German economy this year due to ongoing supply bottlenecks in the industry. The gross domestic product is likely to grow by only 2.5 percent instead of the 3.3 expected in June, according to the forecast published on Wednesday by the Munich economic researchers.
“The strong recovery after Corona, which was originally expected for the summer, is further postponed,” said Ifo economic director Timo Wollmershäuser. At the same time, the forecast for 2022 was raised from 4.3 to 5.1 percent. In 2023 it should only reach an increase of 1.5 percent. For comparison: in 2020 Europe’s largest economy collapsed by 4.6 percent due to the corona pandemic.
“At the moment, industrial production is shrinking as a result of supply bottlenecks for important preliminary products,” said Wollmershäuser. At the same time, the service providers recovered strongly from the Corona crisis. “The economy is divided,” said the economist.
“The sudden increase in global demand for durable consumer goods, electronic items and special medical products has pushed many manufacturers of industrial intermediate products to their capacity limits.” In addition, global supply chains would be confronted with enormous logistical challenges as a result of greatly changed flows of goods.
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Private consumer spending could benefit
In contrast, private consumer spending should benefit from the weakening of the corona crisis. This would contribute to more favorable income and employment prospects. The service providers have recently hired significantly more, while unemployment and short-time work have fallen. The number of unemployed is likely to be 2.6 million this year and is expected to drop to 2.3 million by 2024.
According to the Ifo Institute, consumer prices will rise by 3.0 percent this year. In 2022, the inflation rate is expected to fall to 2.3 percent, and even to 1.6 percent in 2023. The experts see the deficit in the state budget this year at 157.3 billion euros, but it is expected to shrink to 52.1 billion euros in 2022. The national budget should then be balanced again for the first time in 2023.
Other research institutes had recently lowered their forecasts. The RWI in Essen expects 3.5 percent economic growth this year, the IWH in Halle 2.2 percent and the DIW in Berlin 2.1 percent. The leading research institutes want to present a joint autumn forecast in mid-October.
These forecasts are based on the assumption that only the currently agreed economic and financial policy packages will be implemented. Whether it will stay that way is questionable, as a new government coalition is considered likely after the general election on Sunday.
More: The next government has a difficult path back to normal