From FT Alphaville's Claire Jones:
Germany’s reliance on its manufacturing prowess has left it acutely vulnerable to supply chain woes.
The eurozone’s economic powerhouse is stuttering. Courtesy of the FT’s Frankfurt bureau chief Martin Arnold this morning:
The German economy shrank as much as 1 per cent in the final three months of last year, as the latest coronavirus restrictions and supply chain bottlenecks kept output below pre-pandemic levels. The Federal Statistical Office on Friday published initial estimates showing Europe’s largest economy managed growth of 2.7 per cent last year, despite fourth-quarter output falling between 0.5 and 1 per cent from the previous quarter.
Meanwhile, inflation for the year to December came in at 5.3 per cent. Unlike the UK, the US, and euro area counterparts such as France, Germany’s GDP remains below its pre-pandemic levels. That’s despite the country, in terms of pandemic-related health outcomes, faring better than the other three.
Economists agree that most of the blame for its lacklustre performance lies with supply chain bottlenecks. Germany’s manufacturing prowess means that an awful lot of value added comes from its automotive industry, for instance, which has been hit particularly hard by the chip shortage.Economists, however, are less united on what comes next....
....MUCH MORE
I'm thinking a nice digestif.
