Experts cut outlook for German growth amid 3rd pandemic wave

FRANKFURT, Germany (AP) — Leading German economic institutes have slashed their growth forecast for 2021 as a slow vaccination rollout and a more contagious variant of the coronavirus have meant continuing restrictions on business activity in Germany.

The institutes cut their joint forecast for this year by a full percentage point, to 3.7%, compared to an earlier forecast issued in the fall.

Germany has experienced a difficult third wave of the pandemic, with infection numbers rising and more COVID-19 patients requiring intensive care. Meanwhile, vaccinations against the virus have lagged compared to the United States and the United Kingdom, although the pace in Germany picked up somewhat over the last week.

Torsten Schmidt, forecasting chief for the Leibniz Institute for Economic Research in Essen, said Thursday that the institute expects pandemic-related restrictions to start being eased from the middle of the second quarter and to be mostly withdrawn by the end of the third.

“In the course of the opening, we expect a strong broadening of economic activity, particularly for the service sector. which has been especially hard hit by the pandemic,” Schmidt said.

The German economy is rebounding from a 4.9% drop in output in 2020. Exports and industrial activity have adjusted better to virus restrictions, but services and retail enterprises that depend on face-to-face contact have lost much of their business.

Restrictions can differ among Germany's 16 states. In general, restaurants and bars remain closed for in-house dining, non-essential travel is discouraged and much non-food and non-pharmacy retail is closed.

The federal government is working on a set of uniform measures that would take effect when a region's seven-day average of new cases rises above 100 per 100,000 population.

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