Ifo announcement on the upswing: "Moving further back" - but surprise for 2023

Created: 12/14/2021, 11:38 AM

The Ifo Institute has significantly lowered the economic outlook for 2022 (symbol picture).

© Silas Stein / Imago

The German economy is coming out of the corona hole more slowly than expected.

But the forecast for 2023 is encouraging.

Munich - The fourth Corona * wave and global delivery bottlenecks are dampening the outlook: The Munich * Ifo Institute has significantly lowered its economic forecast for 2022.

The economists are now expecting economic growth of 3.7 percent - 1.4 points less than estimated in the autumn.

"The strong recovery initially expected for 2022 will be postponed further," said Ifo Economic Director Timo Wollmershäuser.

In return, the economy is expected to grow faster in 2023 than predicted in autumn and increase by 2.9 percent.

Economy in Germany: growth forecast for 2022

The postponement was "largely due to the fourth corona wave and the production difficulties in the manufacturing industry," it said as a justification.

This "noticeably" slows down the German economy.

Accordingly, the Ifo experts do not expect a strong recovery in the German economy until the summer half of 2022, because then the corona wave will subside and a “gradual end to the delivery bottlenecks will set in”.

At the same time, the institute expects the inflation rate to rise again - from 3.1 percent this year to 3.3 percent next year.

The reason for this are the higher costs associated with the delivery problems and the delayed adjustment to the increased energy and raw material prices.

Forecast for the unemployment rate in Germany in 2022

On the labor market, the Ifo Institute is expecting a noticeable improvement in short-time working: the average number of around 1.7 million employees this year is likely to fall to around 313,000 in the coming year.

The experts expect the unemployment rate to decline from 5.7 percent in 2021 to an average of 5.2 percent in the coming year.

However, the present forecast is "associated with a number of risks," warned the Ifo Institute.

A “significant downside risk” arises from the further course of the pandemic *, for example whether there will be a new lockdown *.

In addition, the production losses are likely to be significantly greater than estimated if the bottlenecks in the delivery of preliminary products intensify instead of easing.

Another “uncertainty” is the future financial policy of the new government *.