EXCLUSIVE Germany cuts 2021 GDP growth forecast, lifts 2022 estimate – sources
BERLIN, Oct.26 (Reuters) – The German government has lowered its forecast for economic growth for this year to 2.6%, but raised its estimate for next year to 4.1% as supply problems delay the recovery in Europe’s largest economy, two sources close to said the decision on Tuesday.
The government’s revised forecast for gross domestic product growth compares to an April forecast that the economy is expected to grow 3.5% in 2021 and 3.6% in 2022.
By 2023, the government now expects economic growth to normalize with an expansion rate of 1.6%, the two sources told Reuters on condition of anonymity.
Economy Minister Peter Altmaier will present the government’s updated growth forecasts at a press conference on Wednesday. A spokesperson for the Ministry of the Economy declined to comment on the updated figures.
The scarcity of semiconductors and other intermediate goods, caused by supply chain disruptions due to the COVID-19 pandemic and an increase in demand for chips in an increasingly digitalized world, is holding back German manufacturing production.
In addition to supply issues for electronic components, companies are also struggling to meet high demand due to shortages of raw materials.
Widespread production bottlenecks coupled with unusually high demand are driving price increases and that is why the German government expects consumer price inflation to reach 2.9% this year. year, one of the sources told Reuters.
But the government is sticking to its assessment that the price spike will be temporary and expects inflation to drop to 2.2% in 2022 and 1.7% in 2023, the source said. The figures compare to consumer price inflation of 0.6% in 2020.
The mixed growth outlook for the economy comes after the Ifo Institute said Monday that business morale deteriorated for the fourth consecutive month in October and hit a six-month low. Read more
It also matches the latest assessment from the central bank, which said on Monday that economic growth is expected to slow sharply in the fourth quarter, with full-year growth now likely to be “significantly” lower than its forecast of 3.7%. made in June.
Written by Michael Nienaber, edited by Riham Alkousaa, edited by Timothy Heritage
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