The German government cut its economic growth forecast for this year to 2.6% and lifted its estimate for next year to 4.1% as supply bottlenecks are delaying the recovery in Europe's largest economy, the economy ministry said today.
Economy Minister Peter Altmaier told reporters that the economy was intact, but that supply chain disruptions and a spike in energy prices were complicating the recovery.
The revised government forecast for gross domestic product growth compares with an April prediction for the economy to grow by 3.5% in 2021 and by 3.6% in 2022.
Meanwhile, German consumers kept their spirits high heading into November despite rising inflation, as the mood improved for the second month in a row, according to a survey today.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, rose to 0.9 points for November, from a revised 0.4 points a month earlier.
The reading compared with a Reuters forecast for -0.5.
However, the institute warned that the good feelings were unlikely to last if prices continued to climb, a trend that would also delay a fundamental recovery in consumer sentiment .
"German citizens seem to be expecting even more price hikes, which is why they consider it prudent to make purchases now to avoid even higher prices," said GfK expert Rolf Buerkl.
Inflation accelerated at a higher pace than expected in September, German government data showed, rising by 4.1% year-on-year compared with 3.4% in August.
While the propensity to buy rose slightly, both economic and income expectations were on the decline, GfK said.
This indicates that consumers in Europe's largest economy are confident about the country's recovery, though the spectre of companies scaling back production due to supply chain problems continues to loom over many who fear for their income.