German government lowers 2022 economic forecast to 3.6%

Berlin, Jan. 27 (BNA): The German government has cut its economic forecast for this year by half a percentage point due to the spread of the coronavirus pandemic.

In an annual economic report, Economy Minister Robert Habeck said the country is going through a difficult “catch-up” phase, as it battles a fifth wave of the virus, German news agency DPA reported.

In 2022, the government now expects GDP to grow by 3.6 percent, compared to a forecast of 4.1 percent in the fall.

The report says that in the first quarter, economic performance is likely to be severely affected by the epidemic and related restrictions on daily life, particularly in the service sector.

“With increased vaccination rates, it will soon be possible to sustainably contain the epidemic and reduce emergency aid,” Habek said. Hence, the economic recovery will obviously accelerate.”

In 2021, the German economy grew by 2.7%. However, the increase in GDP reported by the Federal Statistical Office based on raw numbers was less than what experts had hoped.

In 2020, economic output fell by 4.6 percent.

High inflation is now a major concern for the government.

“Overall, the increase in consumer price levels is expected to be significant again this year with an annual average of 3.3 percent,” says the annual economic report.

Last year, consumer prices rose an average of 3.1%. High energy costs in particular are driving up inflation, along with supply chain bottlenecks in key industries.

MI