German government cut 2021 economic growth forecast sharply to just 2.6%, comparing to April’s expectation of 3.5%. Economy Minister Peter Altmaier said the downgrade was partly due to supply bottlenecks and rising energy prices, particularly for gas.

Nevertheless, for 2022, growth forecast was upgrade from 3.6% to 4.1%, as the supply bottlenecks ease. Growth is expected to normalize to 1.6% in 2023.

“The precondition is that we stabilize international supply chains, and, for example, make sure that more of the chips are produced that are built into almost every device, especially cars,” Altmaier said earlier in an interview with ARD television.

Germany Gfk consumer sentiment for November rose to 0.9, up from 0.4, above expectation of -0.4. For October, economic expectations dropped from 48.5 to 46.6. Income expectations dropped sharply from 37.4 to 23.3. Propensity to buy rose from 13.4 to 19.4.

“This second increase to consumer sentiment in a row defies increasing inflation. German citizens are clearly expecting further price increases. That is why they consider to make purchases, in order to avoid even higher prices”, explains Rolf Bürkl, GfK consumer expert. “If the surge in prices continues, it would put a strain on consumer sentiment and a fundamental recovery would likely be further delayed.”

Full release here.

Germany’s Ifo export expectations dropped sharply from 20.5 to 13.0 in October, hitting the lowest level since February. Ifo said, “supply problems in intermediate products are now having an impact on manufacturing export”.

President of Ifo Clemens Fuest said: “In the electrical and electronics sector, export expectations have softened but remain at a high level, with companies continuing to expect good international business. However, the mood is bleaker in the chemical industry, where growth rates will be significantly slower. The situation is similar for the automotive industry. In the food and furniture industries, exports are expected to remain constant. The textile and leather industries are now preparing for declining international sales.”

Full release here.

Bundesbank said in the monthly report that inflation in Germany “continue to rise before it gradually declines in the coming year.” Industrial products prices continued to increase. Energy prices have risen mainly due to higher oil prices. “On the other hand, the considerably higher spot market prices for natural gas will probably only have an impact on consumer prices after the turn of the year.”

The economy is expected to “growth significantly weaker” in Q4. Strong momentum in service sector is “likely to subside considerably” too. Manufacturing is likely to “continue to suffer from delivery problems. Output will probably “still fall short of its pre-crisis level of the final quarter of 2019 in Autumn. For 2021, GDP growth is likely to be “significantly less than was expected in the Bundesbank’s June projection.

Full release here.

Germany Ifo Business Climate dropped slightly to 97.7 in October, down from 98.8, missed expectation of 97.8. Current Assessment dropped to 100.1, down from 100.4, above expectation of 99.3. Expectations index dropped to 95.4, down from 97.3, below expectation of 96.1.

By sector manufacturing dropped from 20.0 to 17.2. Service dropped from 191. to 16.5. Trade dropped notably from 9.0 to 3.7. Construction rose from 11.1 to 12.9.

Ifo said: “Supply problems are giving businesses headaches. Capacity utilization in manufacturing is falling. Sand in the wheels of the German economy is hampering recovery.”

Full release here.