The coronavirus pandemic has hit every economy in the world. Various restrictions and long-lasting lockdowns have led to serious consequences that are still hard to eliminate. Against this background, forecasts of a drop in the eurozone’s largest economy sound reasonable.
The ifo Institute, a research institution based in Munich, downwardly revised Germany’s GDP forecast for 2021. Analysts suppose that next year, the economic growth pace may decline to 2.5%, which is 0.8% lower than the previous prediction. Notably, in 2022, the economy is likely to expand by 5.1% that is 0.8 more compared to initial estimates. Ifo's chief economist Timo Vollmershauser said that the revision was mainly caused by a slump in the country’s industrial production as a result of supply constraints.
“The strong recovery from the coronavirus crisis, which was originally expected for the summer, has been further postponed,” Timo Vollmershauser said. He also emphasized that in August economists had expected the economy to jump to pre-crisis levels.
Surging inflation is also exerting pressure on Germany’s post-pandemic recovery. The CPI has already reached the peak last seen in 2008. The jump was primarily caused by higher energy prices. At the same time, the Association of German Banks provided a more positive forecast.
Bankers are sure that mounting external demand for German goods and stable consumption within the country will boost economic revival. Thus, they foresee the GDP rise of 2.3% in 2021 and 4.6% in 2022. “We expect private consumption to grow by 7 percent in 2022. This will be the strongest jump ever since reunification (in 1990),” Christian Ossig, managing director of BDB, said.
