BERLIN (Reuters) – The German economy will grow by a weaker-than-expected 3.3% this year as supply bottlenecks in manufacturing hold back industrial output, the Ifo economic institute predicted on Wednesday.
The lower growth forecast for Europe’s largest economy represented a cut of 0.4 percentage points compared to its previous estimate from March, Ifo said.
For 2022, the institute raised its GDP growth forecast to 4.3% from 3.2% previously.
“In the short term, the bottlenecks in the delivery of primary products in particular are holding back the economy,” Ifo economist Timo Wollmershaeuser said.
“The recovery, which is strong in itself due to the reopening of the economy, is being pushed back a bit further than we had expected in spring.”
Germany’s Daimler and Volkswagen said on Tuesday they are cutting working hours at some of their plants as carmakers continue to suffer from a shortage of semiconductors.
The recovery from the COVID-19 pandemic and supply bottlenecks for chips, timber and other materials are pushing up prices, prompting Ifo to forecast inflation will jump to 2.6% this year from 0.6% in 2020 before easing back to 1.9% in 2022.
The strong rebound is likely to push up domestic demand and with it imports, which are forecast to surpass exports in 2021 and 2022.
This will help to reduce Germany’s large current account surplus to 5.8% of economic output in 2021 and 4.9% in 2022, bringing it below the European Union’s indicative threshold of 6% for the first time in many years, the institute said.
Ifo’s growth forecast is less optimistic than estimates from the Bundesbank, which predicts 3.7% for this year and 5.2% next year.
In contrast to the Bundesbank, the Ifo institute expects household spending to be less supportive as many consumers are unlikely to spend all the savings which they piled up during the lockdowns, Wollmershaeuser said.
(Reporting by Michael Nienaber; Editing by Riham Alkousaa and Emma Thomasson)