FRANKFURT: Germany’s statistics agency will release its estimates of the country’s economic growth in 2021 on Friday, a year that started with high hopes but has been beset by supply problems and new virus restrictions.
Europe’s largest economy is estimated to have grown around 2.6% last year, according to the latest government forecast, a significant improvement on 2020, when the outbreak of the coronavirus pandemic l plunged 4.9%.
But in October 2020, officials expected Europe’s electric power to return in the coming year with 4.4% growth.
Estimates have been gradually revised downwards as supply shortages have hampered industry and new health restrictions to combat new waves of the virus have clouded the economic mood.
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“Overall, 2021 has been a big economic disappointment for Germany,” said Carsten Brzeski, head of macroeconomics at ING.
“Despite the significant fiscal stimulus granted by all European countries, Germany is not emerging from the pandemic stronger or faster than anyone else, but rather as one of the last,” Brzeski said.
The economic boost promised by then-Finance Minister Olaf Scholz in 2020 has become a “bust”, Brzeski said.
A year later, Scholz, now chancellor after his Social Democrats topped the polls in September’s general election, faces the same challenges to revive the economy.
No “post-virus boom”
Attempts to manage the spread of the coronavirus have ended a year in which businesses struggled to get started.
Under the weight of new health restrictions introduced to cope with the increase in the number of cases, the economy was flirting with a fourth quarter of flat or negative growth in 2021.
The pandemic has also caused disruptions in global supply chains, leading to shortages of raw materials and components that have plagued the industry month after month.
German manufacturers, with their extensive network of suppliers and reliance on exports, have been particularly hard hit by the widespread shortages.
The country’s flagship automakers have been forced to halt production at their factories to manage a shortage of chips, a key component in conventional and electric vehicles.
A total of 2.62 million cars were sold in Germany last year, according to the federal transport authority, down 10.1% from 2020, a year in which the industry had already seen its numbers plummet due to the pandemic.
“Despite full order books, the lack of chips, components and raw materials will continue to affect production for a long time,” the head of the influential industry lobby BDI, Siegfried Russwurm, said Thursday during a meeting. ‘a press conference.
“The hoped-for post-corona boom is not happening,” he said, with Germany’s gross domestic product (GDP) still struggling to reach its pre-crisis level of February 2020.
Despite continuing bottlenecks, the pandemic and other issues, including a sharp rise in energy prices, the business lobby has set a growth target of 3.5% for the new year.
It could also be “the most dynamic year for the economy since 2010”, Russwurm said, provided politicians “set the right priorities” to strengthen the economy.
On Tuesday, Robert Habeck, who holds an outstanding portfolio as combined economy and climate minister, announced a series of measures to accelerate Germany’s transition to a carbon-neutral economy and major investments in projects renewable energy.
Habeck said climate protection would spur innovation “in a way we haven’t seen in this country for a long time… We’re going to renew our industries, which means creating value and creating jobs.”
The government is setting aside about 60 billion euros ($69 billion) remaining from the fight against the pandemic to fund its green ambitions.
“The positive thing is it can only get better from here,” ING’s Brzeski said.
“As soon as Omicron passes and the supply chain issues are resolved, Germany will once again become the powerhouse of the European economy,” he said.