The German economy is set to log a noticeable growth in the third quarter before normalizing in the fourth quarter, the economy ministry said on Monday.
However, the further spread of the new coronavirus mutations and their influence on the infection process could cloud the outlook, the ministry said in its monthly report.
According to official estimate, the largest euro area economy recovered in the second quarter, with economic output rising 1.6 percent.
The government observed that the mechanical engineering and automotive industries, which were recently slowed by semiconductor shortages, were able to increase their output.
Given this expansion as well as high order situation, the outlook for the industrial economy remains cautiously optimistic, the ministry added.
On price front, the ministry said inflation increased significantly since the start of the year due to special factors. Nonetheless, inflation will fall significantly early next year after the special effects fade.
The government observed a remarkable recovery in the labor market. The ministry expects short-time working to decline further in the coming months.