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MNI BRIEF: ifo Cuts 2021 Growth Forecast, Raises 2022 Figure

(MNI) LONDON

Germany's ifo cut its 2021 growth forecast by 0.8% Wednesday, with output expected to increase by just 2.5% this year, attributed to ongoing supply bottlenecks for key intermediate products. However Germany's economy could grow by just over 5% in 2022, the institute said, as it raised next year's forecast by 0.8%.

Germany's service sector is rebounding strongly from the Covid-19 crisis, ifo said. Employment growth among service providers ticked sharply upwards in Q2, while unemployment dropped significantly. Short-time work is expected to reach its pre-crisis level next year.

Prices are expected to rise by 3.0% this year, by 2.3% in 2022, and by 1.6% in 2023. Germany's current account surplus will reach EUR 218 billion in 2021, 220 billion in 2022, and EUR 234 billion in 2023 - equivalent to 6.2%, 5.9%, and 6.1% of economic output, respectively.

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com

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