The German economy collides with the fourth wave..Investor morale deteriorates as growth hopes fade


German investor sentiment deteriorated in December, a survey showed yesterday, as a fourth wave of COVID-19 infections and persistent supply bottlenecks in the industrial sector cast a shadow over Germany’s largest economy in Europe.
The ZEW Institute for Economic Research said the economic sentiment index fell to 29.9 from 31.7 in November.
A Reuters poll had expected a further decline to 25.1 points.
“The German economy is clearly suffering from the latest developments in the Covid-19 pandemic,” the institute’s president, Achim Fambach, said in a statement. He added that persistent supply bottlenecks are affecting production and retail trade.
The current conditions index fell to -7.4 from 12.5, against expectations that it would score five points.
“The decline in economic forecasts shows that hopes for stronger growth in the next six months are dashed,” Fambach said.
Recent economic data painted a mixed picture for the German economy at the start of the fourth quarter of 2021.
While weak demand from abroad led to a much larger-than-expected drop in industrial orders in October, factory production rose more than expected in the same month due to an increase in auto production.
The scarcity of chips and other electronic components due to the pandemic has caused major supply bottlenecks and production problems in the huge German auto industry and in other sectors of the economy.
Yesterday’s data showed that German industrial output rose more than expected in October, even as supply bottlenecks in raw materials and intermediate goods continued to undermine production in Europe’s largest economy.
The Federal Statistics Office said that industrial output rose 2.8 percent on a monthly basis after declining 0.5 percent in September in a revised reading.
An opinion poll had indicated an increase of 0.8 percent in October.
Compared to February 2020, the month before restrictions were imposed due to the Corona epidemic in Germany, industrial production in October fell by 6.5 per cent.
Excluding the energy and construction sectors, industrial production recorded a growth of 2.3 percent in October.
On an annual basis, industrial production declined by 0.6 per cent in October, after also declining by 0.4 per cent in the previous September.
This comes at a time when the leaders of the “traffic light” coalition in Germany confirmed during the coalition agreement signing ceremony yesterday that their new federal government is about to face huge challenges.
According to Al-German, the most prominent representatives of the new government’s parties (the Social Democratic Party, the Green Party and the Free Democratic Party) said that the Corona crisis and the goals of climate policy are among these challenges.
For his part, potential German Chancellor Olaf Scholz spoke about the necessity of having full force in order to overcome the Corona pandemic, noting that the results of the negotiations that took place in the past weeks (to form the coalition) made progress possible, adding, “This morning should be morning.” We are heading towards a new government.
Green Party leader Robert Habeck said the aim of the coalition was to create a “government for the people of Germany”, stressing the challenge of combining climate neutrality with economic prosperity in Europe’s largest industrialized nation and the world’s fourth largest.
In a related context, the head of the Free Democratic Party, Christian Lindner, said: “Now the time for action has begun,” explaining that the common goal is to make “more progress.” He added, “We do not delude ourselves, as there are huge challenges facing us.”
On the other hand, Peter Nota, Marketing Director of the German company BMW, announced yesterday that the company has sold its millionth electric car.
Nota pointed out that the company has thus reached a milestone in the transition to more electric motors.
BMW aims to increase sales of pure electric and hybrid cars to two million vehicles by December 2023.
It is noteworthy that BMW has relied on electric cars from a relatively early age, as it had launched its electric car, the i3 model, for sale since 2013.
Nota explained that the company’s total sales of all types of cars declined somewhat in November (November) compared to the same period last year, affected by the semiconductor shortage crisis.


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