By Maria Martinez
A full normalization of contact-intensive business is not expected in the near term in Germany and supply bottlenecks are hampering manufacturing at the moment, the country’s leading economic research institutes said in a report. joint.
“The Corona pandemic is still shaping the economic situation in Germany,” according to the joint economic forecast report from the Ifo Institute, DIW Berlin, IfW Kiel, IWH and RWI.
The German economy will reach normal capacity utilization during 2022. Economic research institutes predict that gross domestic product will increase by 2.4% in 2021 and 4.8% in 2022.
After new waves of infections delayed the recovery in 2020 and 2021, GDP has increased significantly since infections declined in the spring. However, bottlenecks for intermediates hamper production in the manufacturing sector, according to the report. As a result, only consumer-related service industries are growing.
The recovery will slow in winter, as activity in the service sector will remain below usual levels during the cold season, even with low levels of infection, according to the report. In addition, supply bottlenecks will continue to weigh on manufacturing output for the time being, he said.
The institutes expect consumer prices to increase by 3% in the current year and 2.5% in 2022. The public budget deficit is expected to decrease to 2.1% next year from 4 , 9% compared to the GDP of the current year. Given the strong increase in nominal GDP, the ratio of public debt to GDP is expected to decline to 67% in 2022, from 71% in 2021.
A return to normal capacity utilization will gradually overcome the economic consequences of the Covid-19 pandemic. “However, the challenges of climate change and the predictable lower economic growth due to a shrinking workforce will reduce consumption opportunities,” said Oliver Holtemoeller, vice president of the Halle Institute for Economic Research.
Write to Maria Martinez at [email protected]