IfW Institute downgrades German economic growth forecast for 2021

IfW Institute downgrades German economic growth forecast for 2021

The German economy will return to pre-crisis levels later than previously thought – in the second quarter of 2022, the Institute for World Economy in Kiel said, citing industrial supply difficulties.

The Institute for the World Economy in Kiel (IfW) has significantly worsened the market outlook for Germany for the current year. At the end of 2021, Germany’s GDP will increase by 2.6 percent, experts suggest in a document published on Thursday, September 23.

At the same time, economic growth next year will be stronger than previously predicted and will reach 5.1 percent, analysts of IfW are sure. For 2023, they expect GDP growth of 2.3 percent. In the previous forecast, IfW calculated economic growth in Germany at 3.9 percent in 2021 and 4.8 percent in 2022.

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According to experts of the Kiel Institute, the economic crisis associated with the pandemic will cause damage to the German economy of 320 billion euros between 2020 and 2022. “The supply disruptions will cost the industry an estimated 40 billion euros this year, most of which will be returned when supplies are restored,” the statement said. At the same time, the German economy will return to the pre-crisis level only in the second quarter of 2022, IfW believes. Back in June, it predicted that Germany’s GDP would return to pre-pandemic levels in the fourth quarter of this year.

DIW also lowered its forecast for 2021 and improved – for 2022

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A week ago, the German Institute for Economic Research (DIW) downgraded the growth forecast for the German economy for the current year. Germany’s GDP indicator for the year may increase by only 2.1 percent, it said on September 16. Back in June, experts expected the German economy to grow by 3.2 percent in 2021. The DIW raised its forecast for 2022 from 4.3 to 4.9 percent. “If there are no supply disruptions next year, there will be a breakthrough in the industry,” the institute suggests. If this forecast is confirmed, then by the end of 2022 the German economy will again reach pre-crisis levels.

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In 2020, due to the crisis amid a pandemic, Germany’s GDP decreased by 4.6 percent.

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