KIEL INSTITUTE ECONOMIC OUTLOOK - German Economy Summer 2021

After the resurgence of the Covid-19 pandemic interrupted the economic recovery in the winter, GDP will expand at a fast pace in the further course of the year and exceed its pre-crisis level. [...] From July onwards, the temporary reduction of value added taxes in the second half of 2020 will also become visible in annual inflation rates, which as a result may approach 4 percent in individual months in the later course of the year. [...] In the second quarter, the share of companies in the manufacturing sector complaining about labor shortages as a limiting factor to production was already above pre-crisis levels and thus above the historical average (European Business Survey of the European Commission). [...] Thereafter, in the second half of the year, the recovery in employment will also gain momentum. [...] The credit impulse is the change of the credit growth relative to the growth in GDP.