Germany is teetering on the verge of recession this winter, with supply shortages and a wave of new coronavirus infections stifling the economy.
According to projections published Tuesday by the Ifo (Institute for Economic Research), Germany’s economy will decline 0.5 percent in the fourth quarter of this year, compared with the third, and remain stagnant throughout the first three months of 2022.
When an economy shrinks for two quarters in a row, it has entered a recession.
Head of Forecasts at the Institute for Economic Research Timo Wollmershäuser commented on the projections, “Ongoing supply bottlenecks and the fourth wave of the coronavirus are noticeably slowing down the German economy. He continued, “The strong post-pandemic recovery that was originally expected for 2022 still hasn’t materialized.”
The coronavirus outbreak is expected to subside next summer and supply bottlenecks ease, but the slow start to the year will hurt the production superpower. Ifo reduced its 2022 growth prediction by 1.4 percentage points to 3.7 percent.
The International Energy Agency announced on Tuesday that a rise in instances would put a damper on the global oil demand recovery. The organization lowered its future oil demand forecast by about 100,000 barrels per day for both 2021 and 2022, attributing the decrease to airline travel and jet fuel.
As part of new restrictions, Germany has now banned unvaccinated individuals from entering all but the most essential companies, such as supermarkets and pharmacies.
Last week however, Germany saw its highest number of daily deaths from Covid-19 since February, as the country struggled to control a fourth wave of the epidemic.