Impending zero growth: Economists predict a hard winter for the German economy
According to economists at leading financial and economic institutes, the German economy is facing a hard winter. “After the summer economic boom, it should at best be enough for mini-growth at the turn of the year,” said Katharina Utermöhl from the Allianz Group in a survey by the German press agency. Marc Schattenberg from Deutsche Bank even expects zero growth over the coming months. “I expect economic growth to stagnate in the winter months,” he said.
In the eurozone, Germany is now at the bottom of the list in terms of economic growth. Utermöhl is forecasting only 2.7 percent for the Federal Republic of Germany this year. In the euro zone, growth is estimated at around five percent.
The background to this is the consumer mood, which has collapsed due to the escalating corona infection situation. For a long time, the structural problems of the industry were compensated for by a boom in private consumption – among other things because of the catch-up effects after the lockdowns. “We are experiencing that consumption is also deteriorating again in the service sector,” said Veronika Grimm, member of the German government’s advisory council for “Wirtschaftweise”.
However, it restricted: “The effect on the economy will remain limited.” The economic sectors mainly affected, such as culture, tourism and gastronomy, are sectors that have only a small share in gross value added. Nevertheless, Fritzi Köhler-Geib, the chief economist of the state-owned banking group KfW, admits that the signs are not pointing upwards. “In view of these setbacks, all economic analysts have revised their forecasts for the current year significantly downwards,” she said.
With a slump in consumption, the ongoing supply bottlenecks in industry and the continued high energy costs, the German economy is “under pressure on all fronts,” said Katharina Utermöhl. However, the economy has also learned to deal with the circumstances, restrictive measures are likely to be more targeted this time than they were a year ago. “On the whole, however, we expect the growth losses to be less than in previous waves. We therefore do not expect an economic downturn.” Veronika Grimm also emphasized that as long as the vaccinated could participate in public life, the consumption brake would not be too strong.
However, there could be a significant slowdown in the recovery processes on the labor market. It is true that the companies have now learned to deal with the instrument of short-time work, as Marc Schattenberg explained. “But we are also counting on significantly more short-time work again,” said Katharina Utermöhl. Especially then, should there be a further lockdown, for example in some areas of retail or gastronomy. In their opinion, the state corona aid should be extended until spring.
KfW chief economist Köhler-Geib pointed out that the uncertainties of the pandemic on the labor market are meeting a blatant shortage of skilled workers. “Since reunification, there has never been so many companies in the industry as they see themselves as being affected by a shortage of skilled workers. This shows that the shortage of skilled workers is growing into a problem that business and politics urgently need to take care of,” she emphasized. (dpa / rs)