German Economy Suffers a Setback in the 2021/2022 Winter Half-Year
Germany’s economy is taking a hit over the 2021/2022 winter half-year, temporarily interrupting the strong recovery of last summer. “The economic standstill in winter is due mainly to the fourth wave of the coronavirus, leading to a drop in sales for the hospitality industry and other consumer-related service providers,” says Timo Wollmershäuser, Head of Forecasts at ifo. “However, the losses are significantly less than during the coronavirus waves of a year ago, when uncertainty about the pandemic’s progress was considerably greater.” The German Federal Statistical Office announced today that gross domestic product in 2021 was 2.7 percent higher than in the previous year.
In the manufacturing sector, value-added contracted during the first three quarters of 2021, but then the situation stabilized somewhat at the end of the year. Bottlenecks in the supply of intermediate products have been worsening recently, but some manufacturing industries, especially automakers, were nonetheless able to increase their production compared with the previous quarter. This means that, despite supply difficulties, manufacturing is likely to have performed better than the ifo Institute had expected in December. In the construction sector, there are signs of an increasing easing of material bottlenecks. In light of the strong order situation, construction output is thus likely to have increased at the end of last year. Public service providers also made a positive contribution to GDP growth. Examples include the expansion of government-funded testing capacity and the accelerated administration of booster vaccinations.
