How is the German economy getting through the winter?

As of: December 7th, 2021, 4:19 pm

The global consequences of the pandemic are particularly bad for export-dependent German companies. Now new corona worries have arisen. How will the economy get through the winter?

By Constantin Röse, ARD stock exchange studio

New economic data is often a test of sentiment for the financial markets. There have been a few surprises this week – good and bad. German industry had to cope with a sharp drop in orders in October. This is due to the much-cited material bottlenecks. That is why foreign customers in particular were reluctant to place orders. In addition, there is the aggravated corona situation in many countries.

On the other hand, a positive signal came from industrial production. In the automotive industry in particular, more cars and parts rolled off the production line. For chief economist Carsten Brzeski from ING Germany, this news did not come as a complete surprise. “We now had a situation in which we really only needed a container from Asia or a handful of microchips to finally see production again. Because the stocks were empty,” says Brzeski. “So it doesn’t take much to finally get growth in German industry again.”

Chip production continues to stall

However, the problems have not yet been resolved. In particular, the stagnating semiconductor production in Asia is slowing down companies in this country. Experts estimate that the situation with computer chips could only relax in the second half of next year. And there is another point, says Andreas Scheuerle from Deka-Bank: “No country in Europe is burdened by delivery bottlenecks as heavily as Germany – because of the high proportion of industry and probably also because of the high proportion of the automotive industry.

The fate of the German economy depends above all on the situation in German industry. “The big wild card is industrial production, which, with a brief revival, could possibly prevent the recession,” said ING expert Brzeski.

For most stock market professionals, however, the mood is more pessimistic. The Mannheim Center for European Economic Research (ZEW) publishes the economic barometer for professional investors every month. There is talk of a dark winter half-year, especially because of the corona pandemic that flared up again.

Hope for consumption

On the other hand, the outlook for the coming year is much more positive – also because Corona restrictions could then be removed again. Hotels or restaurants and of course the retail sector should benefit when consumers regain their enthusiasm for consumption. “We expect that next year there will be a really decent growth spurt, with more than four percent growth,” says Sebastian Dullien from the Institute for Macroeconomics and Business Cycle Research at the Hans Böckler Foundation. “Because the Germans put a relatively large amount of money aside during the crisis, some of which they want to spend.”

This optimism is well received on the stock markets – after days of losses on the stock markets. But: In a pandemic, unexpected problems can very quickly thwart the plans of investors and economists.

ARD-Börse: How gloomy will the economic winter be?

Constantin Röse, ARD Börse, December 7th, 2021 3:55 p.m.

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