The German economy is taking a “break” as shortages of goods and labor, as well as new restrictions to fight the coronavirus pandemic, put an end to its recent advance, the country’s central bank said on Monday. ).
The Bundesbank has also warned that inflation in Europe’s biggest economy is likely to stay well above 3% for some time and that upcoming wage talks are likely to generate big increases.
Germany’s economy grew in the first half of the year, with the reopening of services. But since then, it has slowed as its industry is affected by supply disruptions and builders are increasingly struggling to find workers, according to the bank.
“The economic recovery will likely pause,” the German central bank said in its monthly report. “From a current perspective, GDP may stagnate in the fall quarter of 2021 (in the Northern Hemisphere).”
The Bundesbank added that inflation in Germany could stay just below 6% this month, before falling next year, with the VAT cut in 2020 and other temporary factors falling out of the calculation.
Still, the German central bank has forecast consumer prices to grow well over 3% for quite some time, with core inflation – which excludes energy and food – substantially above 2%.
Reference: CNN Brasil
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