Germany ‒ 2021-2023 scenario : Winters roll by, but each one is different…
- Recent economic trends
- Outline of our scenario
- Focus 1: what the new coalition is aiming to do
- Focus 2: easing of supply constraints may take longer
The strengthening of sanitary measures to counter the epidemic wave at the end of the year could again weigh on Q4 growth. Private consumption is likely to suffer a serious slowdown, particularly in services, which are more affected by the restrictions. Investment is likely to remain constrained by uncertainties about demand, while exports are only expected to recover very partially. Overall, annual growth is expected to rise by 2.7% in 2021 before rebounding more strongly in 2022.
The impacts of scarcities are still evident in persistently high metal prices, even though steel, coper and aluminium prices – the backbone of global industry –have fallen a little. Microchip, steel, copper, aluminium and wood prices have fallen somewhat in recent months, but shrinking inventories threaten to push them up in the short term. Companies continue to overwhelmingly report supply bottlenecks for almost 75% of these inputs. While we may have thought the peak of supply strains was behind us at the end of Q3, the renewed virus surge in Q4 could well lead to widespread lockdowns in Asia. These would in turn generate more tension on supply chains and send the cost of the most essential raw materials up – a situation that could drag on at least until the end of the first half. The process of normalising value chains is likely to take longer than initially expected.Philippe VILAS-BOAS, Economist