pandemic
“Wirtschaftweise” see significant risks for the economy
The “economic wise men” present their annual report in Berlin. (Archive image) Photo: Marcus Brandt / dpa
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The corona pandemic continues to burden economic activity in Germany. In the middle of the coalition negotiations between the SPD, the Greens and the FDP, the “economic wise men” present their annual report.
The “economic wise men” see significant risks for the development of the economy in Germany. These include prolonged delivery bottlenecks and a pandemic that flares up again in winter, as the annual report shows.
It will be presented on Wednesday in Berlin and was available to the German Press Agency in advance.
The Council of Economic Experts wants to lower its growth forecast for this year. Economic output will increase by 2.7 percent in 2021. In March, economists had expected gross domestic product to grow by 3.1 percent. The federal government expects growth of 2.6 percent for 2021. Last year, economic output in Germany fell by 4.9 percent as a result of the pandemic.
Compared to spring, the short-term prospects for further recovery have deteriorated, according to the report. “In particular, global supply and capacity bottlenecks affect German industry, which is heavily integrated into global value chains. Rising energy, raw material and transport costs are putting a strain on companies’ profit margins and are likely to be passed on, at least in part, to consumers. “
Further economic development is subject to significant risks, according to the report. «Renewed extensive pandemic-related restrictions or prolonged supply and capacity bottlenecks could have a more negative impact on the recovery than assumed in the forecast. If the bottlenecks are overcome more quickly, however, there will be opportunities that the pent-up consumer and investment demand will result in a more dynamic upswing. ” For 2022, the “economic wise men” expect a strong increase in gross domestic product of 4.6 percent.
The global economic recovery this year was accompanied by an increase in raw material and energy prices. This has led to a significant increase in consumer price inflation. The German Advisory Council expects an inflation rate of 3.1 percent for the full year and 2.6 percent for 2022. According to data from the Federal Statistical Office, inflation in September was 4.1 percent.
However, according to the expert report, long-lasting bottlenecks on the supply side, higher wage agreements and rising energy prices harbor the risk that “actually temporary price drivers” could lead to sustained higher inflation rates.
The unemployment rate is forecast to fall from 5.9 percent in 2020 to 5.7 percent in 2021 and 5.1 percent in 2022. The pandemic in particular poses a significant risk to the recovery of the labor market, it is said: “If there are again restrictions, for example in the catering trade, the positive trend can be significantly weaker.”
The council of experts for assessing macroeconomic development advises politicians. The experts are colloquially referred to as the «economic wise men».