QIII-2021 QUARTERLY REPORT GERMANY
Recovery losing steam Pre-crisis levels within reach by yearend
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German industry expects economic output to increase three percent in real terms this year. We previously forecast growth of 3.5 percent. Despite strong growth in the second quarter, economic recovery in 2021 is set to be slightly weaker than expected back in June.
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Adjustment in forecast triggered by expected stagnation in private consumption expenditure in 2021. On account of the weak performance in the first half of the year, the annual growth rate of one percent previously predicted for private consumption expenditure is no longer within reach.
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Investment in plant and equipment still predicted to increase by seven percent this year. Capacity utilisation in several manufacturing industries is above the long-term average. We expect domestic demand for capital goods to remain high as companies will need to invest in expansion as well as replacement.
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Industry has not really kicked into gear in the first six months of the year. Despite a high volume of orders, industrial production fell 1.2 percent in the second quarter 2021 compared to the previous quarter. For the year overall, we expect output to increase by eight percent due to base effects.
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For 2021 overall, we continue to expect exports of goods and services to rise 8.5 percent in real terms. Trade with EU partner countries and the United States is going very well. Business with China has lost a little momentum. Rising exports will not automatically lead to a sustained economic peak: problems in global supply chains, high logistics costs and unresolved trade disputes are clouding the economic environment.
