Bundesbank corrects growth forecast downwards - more inflation
Berlin - "The upswing is delayed somewhat," said Bundesbank President Jens Weidmann on Friday. Due to the dip in growth, the gross domestic product is estimated to rise by 2.5 percent this year, which is less than expected in June. In the next two years, calendar-adjusted economic growth will increase to 4.2 and 3.2 percent, respectively.
While, according to the Bundesbank projections, pandemic-related restrictions and delivery bottlenecks for intermediate products will slow growth in the winter half-year, private consumption is expected to increase significantly from the coming spring. All sorts of optimistic assumptions play a decisive role: it is assumed that pandemic-related restrictions will then largely be eliminated. Some of the private household savings accumulated during the pandemic should be spent on top of that.
It is also assumed that the delivery bottlenecks will resolve by the end of 2022. The experts at the Bundesbank therefore assume that exports in particular will receive a strong temporary boost. "As a result of the strong upturn, overall economic capacities will be over-utilized again as early as the second half of the coming year," said the President of the Bundesbank.
The Bundesbank projections for the inflation rate are consistently significantly higher than expected in June. An inflation rate of 3.2 percent is expected for this year (measured against the Harmonized Index of Consumer Prices). The increase is not only due to special effects that have long been known, such as the expired reduction in sales tax or the introduction of CO2 emission certificates.
The general price level has risen so sharply because the raw material prices for energy on the international markets have risen surprisingly strongly. In addition, companies would overwhelm consumers with higher costs due to delivery and transport bottlenecks and, in addition, expand profit margins when there is strong demand. On average for the coming year, the inflation rate should rise further to 3.6 percent due to these influences, although special effects, above all those associated with sales tax, will then no longer apply. Inflation was expected to fall to 1.8 percent by June 2022.
According to the Bundesbank experts, the inflation rate will only decrease again when the aforementioned influences subside in 2023. However, it will remain comparatively high at 2 percent in 2023 and 2024. The reasons for this are clearly rising wages, the good economic situation, but also the costs caused by the conversion to a climate-neutral economy. "As in the euro area as a whole, the upside risks predominate for the inflation rate," said the Bundesbank President. "Monetary policy should not ignore these risks and remain vigilant." According to the Bundesbank, the projection was not yet able to take into account the financial policy plans of the new federal government. In the base scenario of unchanged fiscal policy, both the government deficit and the debt ratio fall rapidly. This is because the economy is recovering strongly and crisis aid is running out.This could mean that the national budget could be roughly balanced from 2023 and the debt ratio could be close to 60 percent again. With the new financial policy projects, however, fiscal policy is likely to be more expansive than previously estimated.
Photo: allianz.com
Source: Der Newsticker
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