Germany Economic Forecast

Germany Economic Outlook

December 23, 2021

A second reading confirmed that GDP grew at a weaker sequential rate in Q3, largely due to sliding capital spending and a waning external sector, although upbeat household consumption sustained overall growth. Turning to Q4, early data points to a strong start to the period, although activity has since been disrupted by a marked deterioration in the health crisis. Following a robust expansion in industrial output and rebounding retail sales in October, surging Covid-19 cases have taken a toll on both consumer and business confidence on average in Q4. Moreover, the new wave has dealt a blow to the tertiary sector, with the services PMI pointing to deteriorating operating conditions in December—the first time in eight months—while manufacturing activity seemingly held its ground. In politics, the SPD’s Olaf Scholz was appointed as chancellor on 8 December, at the helm of the SPD-FDP-Greens coalition.

Germany Economic Growth

Stronger growth in both household and capital spending, amid a tightening labor market and the gradual lifting of Covid-19 curbs, will see the economy expand at a notably quicker pace in 2022. That said, with soaring Covid-19 infections and the tightening of travel restrictions at the tail end of Q4, the outlook remains tied to the uncertain trajectory of the pandemic. FocusEconomics Consensus Forecast panelists project the economy to grow 3.9% in 2022, which is down 0.5 percentage points from last month’s forecast, and to expand 2.4% in 2023.

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Germany Facts

Value Change Date
Bond Yield-0.190.41 %Jan 01
Exchange Rate1.120.65 %Dec 31

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