annual economic report
Federal government lowers economic forecast
Robert Habeck (Bündnis 90/Die Grünen) presents the annual economic report. Photo: Bernd von Jutrczenka/dpa
© dpa-infocom GmbH
After the Corona shock in 2020, many experts had expected a rapid recovery in the economy. But the race to catch up is slower than expected. Now the federal government has lowered its forecast.
The federal government has lowered its economic forecast for this year because of the pandemic. Economics Minister Robert Habeck spoke of a difficult economic catch-up phase in his annual economic report presented on Wednesday.
For 2022, the government expects gross domestic product to grow by 3.6 percent. The previous government assumed 4.1 percent in the fall.
In the first quarter, economic output is expected to be impacted by the pandemic and restrictions, especially on services, the report said. “With an increasing vaccination rate, it should soon be possible to curb the pandemic and reduce crisis aid,” said the Green politician Habeck. “Then the economic recovery will accelerate noticeably.”
Higher energy costs fuel inflation
In 2021, the German economy grew again with an expected 2.7 percent growth. However, the increase was lower than long hoped for. In the crisis year 2020, economic output collapsed by 4.6 percent.
Recently, despite the fifth corona wave, delivery problems and increased energy prices, there was news that gave optimists food. The Ifo business climate, Germany’s most important economic barometer, rose surprisingly in January. It was the first brightening since the middle of last year. On Wednesday, the economists announced that the export expectations index also rose, rising to its highest level since September at 17.4 points. The electronics industry and machine builders are expecting particularly significant growth.
When it comes to prices, however, people in Germany cannot hope for a quick relaxation. “Overall, it is expected that the rise in consumer prices this year will again be significant at an annual average of 3.3 percent,” says the annual economic report. On average over the past year, consumer prices have increased by 3.1 percent. Above all, higher energy costs are fueling inflation.
The government sees delivery bottlenecks as an important price driver this year, for example in the case of semiconductors. According to the report, a gradual relaxation is only to be expected in the course of the year. Until then, companies are likely to raise prices noticeably. In addition, according to the government, there will be increased rates of increase in energy prices in the first half of the year compared to the previous year, because these prices only rose so sharply in the course of 2021.