Fourth Covid wave slams brakes on German recovery: Think-tank cuts its growth forecast for EU’s largest economy
Germany’s economic growth is set to slow next year, a think-tank has warned.
The Ifo institute downgraded its forecast for growth in Europe’s biggest economy in 2022 to 3.7 per cent from an earlier estimate of 5.1 per cent.
Timo Wollmershauser at Ifo said: ‘Supply bottlenecks and the fourth wave of the coronavirus are noticeably slowing down the German economy.’
Shut down: Germany has been battling a fourth wave of Covid, with businesses in some areas such as Leipzig (pictured) forced to close early
A production-heavy economy has been particularly badly hit by shortages of raw materials ranging from wood to semiconductors.
Germany has also been battling a fourth wave of Covid, with businesses in some areas forced to close early and unvaccinated people barred from non-essential shops.
The forecast could be a headache for the new government, which took power last week, as it seeks to kickstart the economy with massive investments in digitalisation and climate projects.
Ifo said German GDP was expected to contract by 0.5 per cent in the final quarter of 2021. For 2021 as a whole, growth is set to come in at 2.5 per cent.
The figures are in stark contrast to the UK, which according to the International Monetary Fund (IMF) is predicted to grow at 6.8 per cent this year and 5 per cent in 2022.
Elsewhere, Kristalina Georgieva, head of the IMF has said that Britain has proved ‘more resilient than expected’.
She said the UK had ‘advanced in many respects versus this time last year’ – despite warnings in 2020 that growth could suffer when Britain split from the EU.
Its optimism was despite worries about Omicron. Mrs Georgieva praised Britain’s vaccination roll-out. She said: ‘The foundation for this resilience came from a rapid vaccination campaign, and strong coordinated policy support.’