German Economy: Postponed, Not Cancelled

When a major government stimulus program is launched to prop up the economy, the assessment of many economists is almost always that this will at best spark an "economic flash in the pan." By this is meant that administratively imposed economic charity almost never has a lasting positive economic effect. As a result of the Corona pandemic, many countries have launched huge stimulus packages in the past 15 months, including Germany. The fiscal packages adopted add up to about 14 percent of Germany's total economic output, plus guarantees and bailouts amounting to about 30 percent of GDP. These figures suggest that this time it is not just an economic flash in the pan that has been ignited, but that the upturn is likely to last for several years. 

Although all the conditions necessary for a rapid and strong economic recovery this year have actually been met, economic development in the first half of the year was nevertheless disappointing. This has prompted us to revise our growth forecast for 2021 as a whole downwards from four to three percent. However, this is by no means a signal that the upturn is already running out of steam. After all, the conditions are definitely in place for economic momentum to pick up noticeably in the coming quarters - and not just over a short period of time. For 2002, we expect a growth rate of almost five percent. Postponed is not cancelled!