ECB’s Weidmann: Germany Could Already Regain Pre-Pandemic Output Levels This Summer

11 June 2021

By David Barwick – FRANKFURT (Econostream) – The German economy may return to pre-pandemic levels of output as early as this summer, ECB Governing Council member and German Bundesbank President Jens Weidmann said Friday.

In a statement issued with the Bundesbank’s updated macroeconomic forecasts, Weidmann said that capacity utilisation would be above average next year.

‘The German economy is overcoming the pandemic-related crisis’ and the revised forecasts assume that the Coronavirus will be ‘quickly and sustainably’ contained by vaccination, with public health measures thus soon lifted, Weidmann said.

‘Especially in the previously particularly affected service sectors and in private consumption, this will ensure strong catch-up effects’, he said. ‘Already this summer, economic output could reach pre-crisis levels again’, while economic capacity would be utilised at above-average rates ‘as early as next year’, he said.

The Bundesbank’s latest forecasts for the Eurozone’s largest economy see GDP growth of 3.7% this year, 5.2% next year and 1.7% in 2023. German inflation meanwhile would come in at an average 2.6% this year, 1.8% next and 1.7% in 2023.

‘In the process, inflation rates of around 4% are temporarily possible at the end of the year’, Weidmann said with respect to 2021, owing to special effects whose influence would cease next year.

The Bundesbank assessed the risks to growth as approximately balanced, while risks to inflation were seen as tilted to the upside.