As of: 09/21/2021 1:54 p.m.
The prospects for the German economy for the current year have deteriorated. The OECD expects growth this year to be only 2.9 percent due to the ongoing supply bottlenecks.
While the economy in Europe is likely to recover strongly this year, Germany is falling behind in terms of growth prospects. At least that is how the experts at the industrialized nations organization OECD see it. In their latest outlook, you have revised your forecast for Germany downwards and expect that the local gross domestic product will only increase by 2.9 percent this year. In May, 3.3 percent had been predicted.
This puts Germany in 17th place of the 20 countries examined by the OECD, behind Indonesia and just ahead of Russia. Progress in Japan is even weaker. Economic output (GDP) growth of just 2.5 percent is expected there for this year.
Load delivery bottlenecks
The reason for the weak recovery in this country is the continuing supply problems in the industry. “The automotive industry, which is heavily involved in global trade, and the manufacturing sector as a whole are particularly hard hit by global delivery bottlenecks and logistics difficulties,” said the head of the OECD Berlin Center, Nicola Brandt, explaining the lowering of the forecast for the current year. “That of course slowed the recovery of the German economy.” In addition, because of the corona pandemic, Europe’s largest economy collapsed less than five percent last year than most other countries in the euro zone.
The OECD is therefore also giving hope for improvement. It is said that the demand for German industrial goods will remain strong. “We expect a gradual resolution of the delivery bottlenecks from the fourth quarter and then a stronger recovery,” Brandt told the Reuters news agency.
Higher growth expected next year
The OECD experts have therefore raised their forecast for 2022 from 4.4 to 4.6 percent. For the euro zone as a whole, the OECD predicts the opposite trend. The economy in the 17 countries of the euro zone is likely to grow by 5.3 percent this year instead of the 4.3 percent forecast in May. The reason for the brightened expectations is the unusually strong consumer demand in France, whose economy is likely to grow by 6.3 percent this year. For Italy, the OECD experts also expect a strong increase of 5.9 percent. In the coming year, however, growth in the eurozone is likely to weaken again and, with a plus of 4.6 percent, to match the German rhythm.
For the global economy, the OECD is expecting growth of 5.7 percent this year (previously: 5.8), which is to be followed by an increase of 4.5 percent (previously: 4.4) in the coming year. “A strong recovery in Europe, the likelihood of additional fiscal support in the United States in the next year and reduced household saving will improve the growth prospects in developed countries.”
The US economy is also likely to grow more slowly
OECD Secretary General Mathias Cormann explained the strong plus with the “resolute action of the governments at the height of the crisis”. However, progress is uneven. “In order to ensure a sustainable and comprehensive recovery, a variety of measures are required – from effective vaccination campaigns in all countries to concerted public investment strategies that prepare the ground for the future. In fact, many countries, especially emerging economies, still have production – and employment gaps. ” This applies above all to those countries in which vaccination rates are low.
For the US economy, the growth forecast for this year has been lowered from 6.9 to 6.0 percent, while it has been raised from 3.6 to 3.9 percent for 2022. The Chinese gross domestic product is likely to grow even faster: the forecasts of 8.5 percent this year and 5.8 percent next year have been confirmed.