Frankfurt: Economists lowered their growth forecast for Germany on Wednesday as shortages of key components, including computer chips, weigh on the country’s industrial sector.
The Munich-based Ifo Institute said Europe’s largest economy would grow 2.5% this year, down 0.8 percentage point from its previous forecast, due to the upheaval of the supply chain.
But they raised their growth forecast for 2022 by 0.8 percentage point to 5.1% as the economic rebound from the coronavirus is delayed.
“The strong summer recovery expected” has not materialized, said Ifo economist Timo Wollmershaeuser.
The economy was “divided,” he said, with services and hospitality showing a strong recovery after coronavirus restrictions eased, while “industrial production declines due to bottlenecks in supply “.
A global semiconductor chip crisis, driven by growing demand for electronic consumer goods and coronavirus-related disruptions in supply chains, has had an acute impact on the strength of German exports.
Like other countries, Germany is also grappling with shortages of key raw materials, including plastics, steel and timber.
Germany’s vital auto industry has been hit hard by the scarcity of semiconductors, an essential component of conventional and electric vehicles, forcing automakers to cut production.
On Wednesday, the truck subsidiary of German auto giant Volkswagen said it would “remove” computer components from unsold vehicles to fill orders for other models.
Last week, the German Institute of Economics (DIW) in Berlin cut its growth forecast for 2021 from 3.2 to 2.1 percent, citing factors similar to Ifo.
Economy Minister Peter Altmaier said in June that German growth could reach 4% in 2021, a target that now seems out of reach.