Germany’s growth is being hampered by global shortages.
Germany’s export-driven economy has been hampered by global shortages of industrial components and raw materials, causing the country’s major economic institutes to lower its growth prediction for this year on Thursday.
The research groups reduced their estimate for 2021 from 3.7 percent to 2.4 percent in their biannual forecast, down from 3.7 percent in April.
The institutes (DIW, Ifo, IfW, IWH, and RWI) declared in a joint statement that the corona(virus) epidemic “still influences the economic situation in Germany,” impeding a restoration to regular economic activity.
The German economy has been held back by supply bottlenecks, which were “hampering manufacturing” and meant that “only consumer-related service industries are increasing,” according to the institutes.
Pandemic impacts and shortages are expected to be “gradually addressed” in 2022, according to the institutions, who have raised their growth prediction for the year to 4.8 percent from 3.9 percent.
The International Monetary Fund reduced its own global economic estimates earlier this week, including Germany’s, blaming supply chain bottlenecks.
In reaction to declining export data, Joachim Lang, the chairman of Germany’s influential industrial organization, the BDI, said last week that businesses should brace for a “tough autumn.”
“Whether it’s wood for pallets, packing materials, steel — a crucial input for our industry — or computer chips, semiconductors,” Ralph Wiechers, chief economist at the mechanical engineering industry organization VDMA, told AFP, businesses are facing shortages across the board.
Customers’ orders have begun to decline among the companies Wiechers represents as a result of their inability to obtain materials.
“Why should they buy a plastic processing machine if they can’t access plastic supplies?” he said.
As the economy has deteriorated, a number of Germany’s highly watched economic indicators have turned red.
Last week, the federal statistics office Destatis announced that industrial production decreased by four percent month over month in August, while inbound orders fell by 7.7% following a record July.
Mechanical engineering was one of the most seriously hit areas, according to Wiechers, and shortages were having a knock-on effect on company production and profits.
Only Germany’s major automotive sector was more severely impacted by scarcity, which was exacerbated by a shortage of semiconductors, which are used in both conventional and electric automobiles.
According to the German monthly WirtschaftsWoche, production lines at Volkswagen, Opel, and Ford have come to a halt as bottlenecks tighten, while BMW and Mercedes-Benz have begun delivering vehicles with missing components.
Slowing. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.