By Maria Martinez
The Ifo Institute has lowered its growth forecast for the German economy for 2022 by 1.4 percentage points and raised them by 1.4 percentage points for 2023. Following the revision, Ifo forecasts that GDP Germany will grow by 3.7% next year and 2.9% in 2023, after 2.5%. growth in 2021.
“The ongoing bottlenecks and the fourth wave of the coronavirus are significantly slowing the German economy,” said Ifo’s forecast manager Timo Wollmershaeuser. The strong post-pandemic recovery that was expected for 2022 has still not materialized, he said.
GDP is expected to contract 0.5% in the fourth quarter of 2021 compared to the previous quarter. In the first quarter of 2022, the economy is expected to stagnate.
“In the summer semester of 2022, a strong recovery will set in as the coronavirus wave eases and supply bottlenecks gradually end,” Wollmershaeuser said. Overall economic output is expected to increase significantly in the second and third quarters of 2022, by 2.3% and 1.8% respectively, and then slowly move towards average growth rates, according to Ifo forecasts.
The inflation rate is expected to rise from 3.1% this year to 3.3% next year. Cost increases associated with supply bottlenecks will play a leading role, as will a delayed upward adjustment in energy and commodity prices, Ifo said.
Consumer price increases are not expected to return to normal until 2023, when they are expected to fall back to 1.8%, according to Ifo forecasts.
The unemployment rate will drop from a projection of 5.7% in 2021 to 5.2% in 2022 and 4.9% in 2023. The number of people in employment should therefore increase by around 409,000 in 2022 and by 311. 000 in 2023, after being 97,000 higher than the 2021 average than the previous year.
Short-time working is expected to drop from an estimated average of just under 1.7 million employees this year to around 313,000 next year and 74,000 in 2023, according to Ifo estimates.
In 2021, the government’s budget deficit is expected to be 162 billion euros ($ 183 billion). In 2022 and 2023, deficits of respectively 80 and 20 billion euros are expected by Ifo.
Write to Maria Martinez at [email protected]