The German economy will show strong growth in the third quarter of the year.
According to policymakers at the German central bank, Europe’s largest economy will benefit from the unwinding of the corona restrictions, with the recovery becoming stronger, according to a monthly report from the Bundesbank. However, the pre-crisis level will not be reached this summer.
The report shows that the new German government inherits an economy that has gained momentum in recent months. The German economy contracted in the first months of the year as a result of the corona measures. In the first quarter, the gross domestic product fell by 2 percent. After that, the recovery started with a growth of 1.6 percent a quarter later.
Bundesbank economists are now noting that the recovery is continuing at a faster pace. In particular, private consumption and services have received a strong boost as corona measures were relaxed and have now largely been lifted. There are, however, shortages of materials and supply problems in German industry.
According to the economists, this means that in the third quarter, the economy will not yet reach the level of before the crisis, i.e. the final quarter of 2019.
The outcome of the coalition formation in Germany after the elections this weekend remains open. The social-democratic SPD came out on top and is aiming for a government with the liberal FDP and environmental party De Groenen. However, business leaders have called on major parties to avoid political uncertainty and form a new coalition as soon as possible.