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Supply bottlenecks could delay German recovery, institute warns

Govt advisers cut German growth forecasts, see more inflation
Govt advisers cut German growth forecasts, see more inflation   -   Copyright  Thomson Reuters 2021
By Reuters

BERLIN (Reuters) – Bottlenecks in the supply of raw materials could cost Germany a rapid recovery from the economic impact of the coronavirus pandemic, with two-thirds of the sectors in the economy reporting supply constraints, an economic research centre found.

According to the report by the respected German Economic Institute, reported by Handelsblatt newspaper on Wednesday, 40% of industry groups surveyed reported severe short-term supply disruption. A further third were seeing more modest disruption.

Sectors reporting severe disruptions, to inputs ranging from microchips and wood for construction, included the car and plastics industries as well as the textile, leather and construction industries.

The rapid pace of vaccination in Europe’s largest economy, which would likely unleash sharp demand growth, might end up highlighting the supply problems, the institute warned.

“Especially with social and economic normalisation once again on the agenda thanks to progress on vaccination unleashing pent-up consumer demand, these bottlenecks could slow the recovery,” the report said.

(Reporting by Thomas Escritt; Editing by Cynthia Osterman)