German industry is benefiting from the recovery in the global economy and, according to the research and consulting company Prognos, will grow strongly in 2021 despite current delivery bottlenecks. Many service companies, on the other hand, would find it difficult to come up with a good annual result, according to a Prognos industry forecast that is available to the German Press Agency. Numerous domestic market-oriented service providers were weakened again by the restrictions to combat the third wave of pandemics last winter. The lockdown had hit the hospitality industry and parts of the retail sector, among other things.
Most of the losses are made up for
All in all the experts expect itthat Europe’s largest economy will grow by 3.4 percent year-on-year in 2021 and grow by 4.3 percent in the coming year. “We expect that a good two thirds of the macroeconomic losses from 2020 can be made up again this year.” In 2022, economic output will again be higher than before the crisis. “This means that the German economy is still well below a hypothetical development without the Covid-19 pandemic,” it says.
Prognos expects economic output to grow by 5.4 percent in industry this year, and a smaller increase of 3.0 percent in the service sector. The institute assumes that a possible fourth wave of pandemics will not cause any major economic damage due to the progress in vaccination and that the supply bottlenecks in the industry will gradually be reduced.
Structural change cannot be stopped
However, not all sectors are benefiting equally from the upturn. According to Prognos, the growth winners in the industry this year after the slump in 2020 will be primarily vehicle construction (plus 9.5 percent) and mechanical engineering (plus 7.1 percent), which will benefit from the upturn in the global economy. These sectors should also grow dynamically in the coming year. The experts believe that the metal industry, electrical engineering and the rubber and plastics sectors, among others, will see an above-average recovery.
On the other hand, areas that are primarily concerned with fossil fuels such as mining, coking plants and mineral oil processing are likely to shrink or almost stagnate. “These examples show that even a strong upswing cannot stop structural change,” says the study.
Back to pre-crisis levels in the coming year
According to Prognos, the growth winners in the service sector will be pubs, restaurants, hotels and other accommodation providers. After the historic slump in the Corona crisis year, economic output in the hospitality industry is likely to increase by around 20 percent in 2021, but less than expected at the beginning of the year (plus 28 percent). In the coming year, the experts believe an increase of 29 percent is possible. Overall, the pre-crisis level of value added will be reached again in 2022. A strong recovery is also expected for transport and storage. For retail, Prognos predicts higher growth rates, especially in the coming year.