Supply Chain Problems Throw Sand Into The Cogs Of The German Economy | Economic news


FRANKFURT, Germany (AP) – A closely watched survey of German business optimism fell for the fourth month in a row, highlighting concerns about the impact on Europe’s largest economy of sharply rising prices for energy and stubborn bottlenecks in the supply of raw materials and spare parts.

The Munich-based Ifo Institute, which compiles the survey of thousands of German companies on their outlook, said on Monday its index fell to 97.7 points in October, from 98.9 in September.

“Sentiment in the German economy has darkened,” Institute president Clemens Fuest said in a statement. “Supply issues are giving businesses headaches.”

Supply chain bottlenecks have held back business activity as the global economy rebounds from COVID-19 restrictions and closures. The recovery saw increased demand and limited supply for everything from petroleum to computer parts. One of the most glaring shortages is in semiconductor components for car and truck manufacturers, who have not been able to make as many vehicles as they wanted or could sell.

The recovery has also been accompanied by a surge in inflation which could leave consumers with less purchasing power. Carsten Brzeski, global head of macro at ING bank, said it was difficult to predict when supply chain friction would end and it could take until next summer before things hit. return to normal.

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“All of this means that there is not only a growing risk that the German economy will come to a complete halt in the last quarter of the year, there is also the clear risk that the economy will not reach the levels before the crisis this year, ”he said via email.

Brzeski said the only benefit was that there remained the ingredients for a strong recovery: full order books at manufacturing companies, low unemployment in Germany and excess savings that consumers have to spend after the related restrictions eased. to the pandemic.

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