The DIW Berlin lowered its Germany’s growth projection for this year, citing supply bottlenecks and material shortages, but raised the outlook for next year.
The largest euro area economy is forecast to grow 2.1 percent in 2021, down from the previous outlook of 3.2 percent.
However, experts of the think tank expect the economy to pick up speed in 2022 once bottlenecks have been overcome and infection rates have fallen on a sustained basis.
As such, experts lifted their outlook for next year to 4.9 percent from 4.3 percent seen in June.
Experts said that higher case numbers will not lead to strict containment measures as in winter 2020/21, as the vaccination strategy is working. If the production backlog gradually clears around the end of 2021, German industry should take off in the first quarter of 2022.
Further, DIW said temporarily high inflation is no reason for concern.