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BIP: Now Germany’s vulnerable business model is revealed

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BIP: Now Germany's vulnerable business model is revealed


Germany is first. But only in the race to see which statistical office in Europe can be the first to give an estimate of the economic development of the past year. The Federal Statistical Office (Destatis) in Wiesbaden presented the figures for gross domestic product (GDP) for 2021 on Friday, ahead of its colleagues from all other countries. And they caused some surprises, showing above all that Germany is in danger of falling back to the bottom of the growth scale. Because while most other countries are expecting impressive figures, these are rather poor in Germany. What’s more, the risk of recession is now growing again in this country. And that is no coincidence, because the German business model has proven to be particularly problematic during the Corona crisis. Germany is now in danger of being left behind. Also read Division in society The German economy grew by 2.7 percent last year. However, that is far less than expected a year ago, when the augurs had expected an average of 3.9 percent. But it is also far less than in other EU countries. The last quarter was particularly weak. According to initial estimates, the Wiesbaden statisticians assume that economic output in the fourth quarter of 2021 shrank by 0.5 percent to 1.0 percent compared to the previous quarter. Source: WELT infographic According to the forecasts of the EU Commission, which most observers share, France’s economy is likely to have grown by 6.5 percent last year, in Italy it should be 6.2 percent, and in Spain it is still 4.6 percent Percent. According to Destatis boss Georg Thiel, Germany will probably record the lowest growth of all EU countries. On the one hand, this is of course due to the fact that the slump in 2020 was less severe in this country than in other countries. Nevertheless: “The German economy is recovering somewhat more slowly than the average for the EU countries,” says Thiel. After a minus of 5.9 percent on average in the EU in 2020, the EU economy is likely to have grown by five percent in 2021. In Germany, on the other hand, the minus of 4.6 percent in 2020 is compared to the plus of 2.7 percent last year. The gap compared to 2019 is about twice as large as the EU average. Source: WELT infographic And that’s not all. “With the current omicron virus wave, the economic omen at the beginning of 2022 is not good,” says Christoph Swonke, economic analyst at DZ Bank. He therefore expects a minus in the first quarter of this year. However, that would mean: Germany would fall back into recession, because according to the usual definition, this is the case when economic output shrinks for two quarters in a row. The reason for this is Germany’s dangerous dependency, on the one hand on the auto industry and on the other hand on capital goods, most of which are exported, often to China. Both areas are suffering from the international delivery bottlenecks. Important parts, especially semiconductors, are missing to make all the products ordered.

Supply bottlenecks in the auto industry could continue for another 18 months

“Germany has always been very susceptible to disruptions from abroad,” says Holger Schmieding, chief economist at private bank Berenberg. “Now it’s becoming apparent that our economy not only suffers when foreign markets collapse, but also when foreign countries supply us with too few parts.” He expects that the delivery problems will increasingly subside with the end of the fourth wave. However, it will probably take until the second half of 2023 for the automotive companies to get as many semiconductors as they need. “The delivery bottlenecks will disappear – that’s for sure,” agrees Ralph Solveen, economist at Commerzbank. When that will be is unclear. He also points out that the auto industry was already weakening before the Corona crisis. “Obviously, Germany is no longer that attractive as a production location for some,” says Solveen. Read also Others, however, take a far more relaxed view. For example, Jörg Zeuner, chief economist at the fund company Union Investment, is particularly optimistic. “With further vaccination progress and friendlier weather, consumption and demand for services will increase significantly,” he believes, looking ahead to the coming months. German industry will also drive the growth engine of the German economy. “The supply chain problem should subside and the machine builders can finally work off their high order backlog.” That is indeed possible, because the large industrial companies still seem to be keeping their staff – despite the difficulties. The state-subsidized short-time work helps them, but also the shortage of skilled workers. Companies really want to keep their employees. This makes it possible for companies to quickly rev up to full capacity once the supply bottlenecks have been resolved. Source: WELT infographic And that supports consumption. “So far, the current problems in industry have not reached the citizens,” says Schmieding. They are therefore not restricting their spending, which at least prevents the economy from slipping further. And there is another ray of hope for the German gross domestic product – but from a completely different, hardly expected side. Because a key driver of German growth is now the vaccine manufacturer Biontech. Read also For the first time, license income from the Mainz-based company was included in the official annual result. “These are considered German service exports and are likely to have reached a volume of around half a percent of the value added of the German economy last year,” says Martin Moryson, chief economist at asset manager DWS. However, the Federal Statistical Office remained somewhat unclear as to whether this was already fully included in the first GDP estimate that has now been published. “In this respect, we expect that at a later point in time the gross domestic product will be revised upwards,” says Moryson. Then Germany would suddenly be in a better position. Thanks to the pandemic and vaccines. You can listen to our WELT podcasts here. We use the player from the provider Podigee for our WELT podcasts. In order for you to be able to see the podcast player and to interact with or display content from Podigee and other social networks, we need your consent. Activate social networks “Everything on shares” is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.


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