Germany Raises GDP Growth Forecasts, Expects Consumer-Driven Rebound By Reuters

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2/2 © Reuters. FILE PHOTO: Spread of Coronavirus Disease (COVID-19) Continues in Frankfurt 2/2

By Michael Nienaber BERLIN (Reuters) – The German government raised its growth forecast for Europe’s largest economy to 3.5% from a previous estimate of 3%, as it expects household spending to support the recovery once the recovery is over. lift restrictions on COVID-19, the economy minister said on Tuesday. Germany is struggling to contain an aggressive third wave of COVID-19 infections, as efforts have been complicated by the more contagious B117 variant, first discovered in Britain, and a relatively slow introduction of vaccines against the pandemic. Presenting the government‘s updated growth forecast, Economy Minister Peter Altmaier said Berlin expected gross domestic product to grow 3.6% next year and the economy to reach its pre-pandemic level by 2022 at the latest. “Today’s spring screening is encouraging despite the current severe infection situation,” Altmaier said. The Ifo economic institute said on Monday that the third wave of COVID-19 cases and bottlenecks in the supply of chips and other industrial components were slowing the recovery and clouding Germany’s business prospects. When asked how much growth the chip shortage will cost the German economy this year, Altmaier said the impact was difficult to quantify at this stage. Several German companies have already warned that supply problems with chips and other components will lead to weaker-than-expected production in the second quarter. Supply bottlenecks in production and the general economic recovery are expected to increase price pressures in Germany, with the government forecasting consumer price inflation to rise to 2.2% this year and ease as 1.5% next. Altmaier said authorities should be able to lift most restrictions to contain the pandemic during the summer. The government wanted to help companies master the transition to a carbon neutral economy and was ready to adjust legislation together with the European Union to support investment to help transform the steel industry and other sectors, Altmaier said. The economy minister also said that the government was supporting the national development of battery cells for electric vehicles with 3 billion euros, which should help Germany accelerate its efforts to reduce carbon emissions in transport.

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