BDI lowers economic forecast – weaker private consumption

Released on 20.09. 2021

  • A couple with a shopping bag walks past the long shadows of several houses in the city center. The low consumer mood dampens expectations of economic growth. Photo: Hauke-Christian Dittrich

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The economic crisis remains visible. The Federal Association of German Industry (BDI) has now corrected its forecast for the rest of the year downwards. 2021

Berlin (dpa) – German industry has lowered its economic expectations for the current year. Despite the strong growth in the second quarter, the economic recovery 20 will be somewhat weaker.

This means that the forecast is below the growth that was expected in June. This is what it says in the quarterly report published on Monday by the Federation of German Industries (BDI).

The association now expects economic output to rise by three percent in real terms for the year as a whole. Most recently, the BDI had assumed an increase of 3.5 percent.

Less spending in the private sector

«Reason for our correction is the expected stagnation in private consumer spending 20 ”, explained BDI Managing Director Joachim Lang. It is true that private consumption, an important pillar of the German economy, picked up speed after the gradual relaxation of the corona restrictions in the spring. However, that was not enough to prevent an overall decline in the first half of the year.

According to the BDI, private consumer spending fell in real terms by two percent in the first six months compared to the same period of the previous year. The previously forecast annual growth rate of one percent is therefore no longer achievable.

According to the BDI, Europe’s largest economy is being pushed by booming exports. The industry association continues to expect an increase in exports of goods and services by 8.5 percent in real terms. Trade with the EU partner countries and the USA is going extremely well. Business in China is showing somewhat lower growth rates. The increase in exports is not an automatic mechanism for a sustained economic boom, warned Lang against too high expectations. “Problems in global supply chains, high logistics costs and unresolved trade disputes darken the economic sky.”

Hope for the end of the pandemic

The BDI assumes its Forecast that a large part of the population will have received vaccination protection by the end of the year and that possible pandemic-related precautionary measures will no longer affect economic activities. In this case, economic output could rise to pre-crisis levels in the fourth quarter.

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