Ifo releases its latest forecasts for the German economy
- 2021 GDP growth cut from 3.7% to 3.3%
- 2022 GDP growth lifted from 3.2% to 4.3%
- 2021 inflation to jump to 2.6%
- 2022 inflation seen easing to 1.9%
The cut in the growth forecast for the year is attributed to supply bottlenecks, which in turn is also manifesting in higher price pressures i.e. inflation.
That is a reasonable argument but it also means that Ifo sees this supposed ‘transitory’ effect being more persistent especially in 2H 2021 as well.
Just take note of this in case more macro projections start to reflect similar sentiment, which in turn might turn the screws on central banks to do something.