The Ifo Institute said that supply problems and a new wave of coronavirus infections will negatively affect the pace of economic recovery in Germany next year.
Ifo expects German GDP to fall by 0.5% in quarterly terms in the 4th quarter and remain unchanged in the 1st quarter of 2022. Ifo also confirmed its growth forecast for 2021 (+2.5%).
As for the next year as a whole, the Ifo Institute revised its forecast for German GDP growth to 3.7% from 5.1%. Meanwhile, the forecast for 2023 has been significantly improved - to 2.9% from 1.5%.
The Ifo Institute reported that inflation in Germany is likely to continue to rise in the near future, which will reduce the purchasing power of consumers, given the insignificant pace of wage growth.
According to Ifo forecasts, by the end of 2021, the growth of the German consumer price index will be 3.1%. As for 2022, Ifo expects CPI growth to accelerate to 3.3% amid supply problems and high prices for energy and raw materials.
Meanwhile, the Ifo Institute said that in 2023 consumer inflation is likely to fall to 1.8%.