Status: 23.08.2021 2:56 p.m.
The Bundesbank is concerned about the delta variant and the slowdown in vaccination dynamics. The economy could be weaker than expected this year. But in summer we experience a growth spurt.
The increasing number of corona cases is leading to growing uncertainty regarding further economic development. Against this background, the Bundesbank’s economists have now declared that their latest economic forecast from June may have been too optimistic. From today’s perspective, economic growth in the current year could be on average “somewhat lower than expected in the June projection,” writes the central bank in its current monthly report.
According to the Bundesbank, the delta variant and a decline in vaccination dynamics could lead to stricter containment measures again. That in turn would weigh on the economy again – albeit only in the autumn quarter.
In addition to the consequences of the pandemic, the Bundesbank considers the destroyed infrastructure and production capacity in the areas hit by the flood disaster to be a manageable burden. “Overall, it remains to be seen whether GDP will return to its pre-crisis level in summer or not until autumn,” the central bank added.
A strong summer – for the economy
In June, the Bundesbank had forecast a calendar-adjusted increase in gross domestic product (GDP) of 3.7 percent for the current year. In December it had only forecast an increase of 3.0 percent. A growth of 5.2 percent was forecast for 2022.
The Bundesbank experts were optimistic about the summer months. “The German economic output is likely to grow strongly in the summer and increase even more strongly than in the spring,” says the monthly report. On the basis of monthly estimates of the gross domestic product (GDP), economic output in the current third quarter could increase by a good three percent compared to the previous quarter – after a plus of 1.5 percent in the second quarter.
Well-filled order books
According to economists, the hospitality industry, the travel industry and retail outlets could benefit particularly strongly from the containment measures that have been significantly relaxed since mid-May.
In addition, the order books in construction and in industry are well filled. Here the Bundesbank saw the first signs that the supply bottlenecks for some preliminary products and raw materials are no longer worsening as significantly as they were in the second quarter. Most recently, the vast majority of German companies had complained about such delivery problems, according to a recently published survey by the German Chamber of Commerce and Industry (DIHK).
A big deficit in the state budget
Last year, the corona pandemic plunged the German economy into the deepest recession since the global financial crisis in 2009. GDP collapsed by 4.8 percent in real terms.
In addition, lower tax revenues and billion-dollar aid packages for the economy in the Corona crisis tore deep holes in the state budget last year. In the course of this year, according to the Bundesbank, the economic recovery will have an increasingly positive effect on public finances. Nevertheless, the deficit is likely to widen and exceed five percent of GDP. In the previous year it was 4.5 percent.