Joint Economic Forecast Autumn 2021

Crisis is Gradually being Overcome – Align Actions to Lower Growth

Halle, October 14, 2021

 

The Corona pandemic still shapes the economic situation in Germany. A complete normalisation of contact-intensive activities is not to be expected in the short term. In addition, supply bottlenecks are hampering manufacturing for the time being. The German economy will reach normal capacity utilisation in the course of 2022. In their autumn report, the leading economic research institutes forecast that Gross Domestic Product (GDP) will rise by 2.4% in 2021 and by 4.8% in 2022.

The institutes expect consumer prices to rise by 3% in the current year and by 2.5% in 2022. The public budget deficit is likely to decline from 4.9% in relation to GDP in the current year to 2.1% in the following year. Given the strong increase in nominal GDP, the government debt-to-GDP ratio is expected to decline from 71% in 2021 to 67% in 2022. The economic consequences of the Corona crisis will be gradually overcome with the return to normal capacity utilisation. However, the challenges of climate change and the foreseeable lower economic growth due to a shrinking labour force will reduce consumption opportunities.

The Joint Economic Forecast was prepared by the German Institute for Economic Research (DIW Berlin), the ifo Institute (Munich), the Kiel Institute for the World Economy (IfW Kiel), the Halle Institute for Economic Research (IWH), and RWI (Essen).

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