ECB’s Weidmann: Germany Could Undershoot GDP Forecast Given Pandemic Developments

6 April, 2021

By David Barwick – FRANKFURT (Econostream) – German economic growth will probably turn out lower than recently expected in light of ongoing public health restrictions, European Central Bank Governing Council member and German Bundesbank President Jens Weidmann said Tuesday.

‘Containment measures over the past few months have been stricter than anticipated and they will likely stay so in the near future’, Weidmann told Reuters news agency. ‘This has reduced the likelihood that the growth rate of 3% projected in December can still be achieved this year.’

‘But then growth would be higher next year’, he said. ‘From today's perspective, the medium-term economic outlook is not fundamentally in doubt.’

Last December, the Bundesbank projected real, calendar-adjusted growth of 3.0% this year, 4.5% in 2022 and 1.8% in 2023.

On March 31, Weidmann already voiced the concern that ‘[d]ue to the currently strong increase in the number of infections, it could take longer for the protective measures to be relaxed than assumed in the March forecast’ of the ECB.

‘The economic recovery would be delayed accordingly’, he added. ‘In this case, the forecast of the GDP growth rate for the euro area in 2021 might no longer be sustainable.’

However, euro area activity this year could still attain the level foreseen in March if progress in vaccinating people allowed an economic reopening, he said.