Economics Veronika Grimme adds: “You have to be very careful about whether a wage-price spiral sets in and, if this happens, take countermeasures with monetary policy.” Manufacturers sometimes pass on price increases when purchasing with a delay. Producers have recently had to contend with significant price increases for material affected by supply bottlenecks, freight costs and energy prices.
However: A structural increase in inflation is not yet evident, said Utermhl. She expects inflation to reach the target of two percent again on average in the coming year. The European Central Bank will monitor the situation in Germany closely. However, she does not see the central bank raising interest rates before the second half of 2023. Before that, Veronika Grimm also believes, bond purchases would have to be scaled back first. “We are not in a situation like in the USA. There, the economic recovery is ahead of Europe, with even higher inflation rates,” she said, referring to the forthcoming interest rate hikes by the US Federal Reserve.
The economy will continue to be burdened by the rapid increase in corona numbers in the Omicron wave. “The soaring number of infections is likely to push economic activity down further in the coming months,” said the chief economist at the state banking group KfW, Fritzi Khler-Geib. “The pandemic is hanging over the economy like the sword of Damocles,” said Katharina Utermhl.
“For the winter half-year, I expect a technical recession with two negative quarterly growth rates,” emphasized Khler-Geib. Marc Schattenberg also said: “We expect a slight technical recession.” In the spring, however, Schattenberg expects a rapid recovery and for 2022 as a whole a full recovery with growth in economic output of four percent. Katharina Utermhl from Allianz is somewhat more cautious with an expected growth of three percent.
In this context, KfW chief economist Khler-Geib pointed out the ongoing shortage of skilled workers in Germany. “This has intensified the competition for scarce workers,” she said. “All in all, the signs on the job market continue to point to recovery.” Schattenberg expects a strong increase in the number of unemployed for January, but even a slightly more favorable development after seasonal adjustment. “The labor market is likely to come through the winter robustly. Skilled workers are being sought and hired,” he said.
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NRNBERG (dpa-AFX)
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