Economic institutes lower economic forecast

Berlin (dpa) – The ongoing consequences of the pandemic and delivery bottlenecks are slowing the economic upturn in Germany. Leading economic research institutes significantly lowered their economic forecast for this year.

Other key results: Inflation should continue to rise until the end of the year – but fall again next year. According to the forecast, the unemployment rate is likely to decline, and disposable incomes will rise significantly in the coming year. For the spring, the experts expect a boost in private consumption.

The institutes are expecting growth in gross domestic product in Germany of only 2.4 percent this year the corona-related slump in the economy 2020 the gross domestic product increased by 3.7 percent this year.

The economic situation in Germany is still characterized by the corona pandemic, it was said. A complete normalization of “contact-intensive activities” is not to be expected in the short term. The service sector in particular suffers from this.

The global economy is picking up again

One of the consequences of the pandemic is global delivery bottlenecks. Last year the demand collapsed, now the global economy is picking up again, especially in Asia. However, traffic jams at ports and a lack of container capacity are hindering exports. Pre-products are missing or have risen sharply in price. This concerns, for example, a shortage of semiconductors – which is affecting the automotive industry. The increased energy prices have fueled the rise in prices in Germany: In September consumer prices climbed by 4.1 percent compared to the same month last year, as the Federal Statistical Office announced on Wednesday.

The economic research institutes are anticipating an increase in consumer prices by 3 percent in the current year. In the coming year, it is expected that the price surge will ease somewhat and inflation will drop to 2.5 percent – but that would still be a high level.

One could give the all-clear for the “acute inflationary pressure” said Stefan Kooths from the Kiel Institute for the World Economy. Consumer prices would adjust themselves again in the course of the coming year – also because special effects would then disappear. Currently, the withdrawal of the temporary VAT cut in the second half of the year 2020 has a full impact on inflation.

Unemployment rate should fall

See on the labor market the institutes signals for further relaxation. Employment is likely to continue to grow, and the unemployment rate is likely to fall to 5.7 percent this year after 5.9 percent in the previous year Measures such as the partial abolition of the solidarity surcharge at the beginning of the year. The institutes anticipate that disposable income will rise by 2.1 percent. In the coming year, the increase is likely to be higher at 4.4 percent.

2022 According to the forecast, the economic upswing will then be stronger: The institutes are anticipating growth of 4.8 percent . In their spring forecast, they had assumed an increase of 3.9 percent for the next year.

A key driver of the economic recovery in the coming year will be private consumption, said Oliver Holtemöller from Leibniz -Institute for Economic Research Halle. In the corona pandemic, many consumers put money on the high edge, and the savings rate has risen. “If the pandemic no longer affects economic activity in the spring of next year, consumption will recover at strong rates,” says the forecast.

Economics Minister Peter Altmaier (CDU) said the German Economy is recovering and growing. However, the pace of growth has slowed down. DIHK managing director Martin Wansleben said the economic recovery after the pandemic was stuttering. The economy needs a noticeable “investment jolt”.

Economists call for reforms

With a view to the negotiations on a new federal government, economists called on politicians to carry out reforms. The pension system is not stable, said Holtemöller. The current climate policy is not sufficient to achieve the emission targets and unnecessarily expensive for given targets. The institutes propose that the state gradually reduce CO2 certificates. With rising CO2 prices in transport, it is important to create a social balance, especially for low-income households.

In addition, the “scope for distribution” will decrease in the coming years, according to Holtemöller. This is also related to the aging of society. Fewer workers per inhabitant would have to generate the income, a larger part of the income than before would have to be invested in order to master climate protection, as the forecast says. Holtemöller said: “Politicians and the population in Germany have not yet fully understood that climate protection means that we have to tighten our belts.” Spring and autumn – from the German Institute for Economic Research, the Ifo Institute, the Institute for World Economy, the Leibniz Institute for Economic Research Halle and the RWI – Leibniz Institute for Economic Research Essen.

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