Ifo economist says that supply problems are weighing on German economy

Remarks by Ifo economist, Klaus Wohlrabe

  • Supply problems weigh on both industry and retail
  • 64% of industrial firms complain of shortage of materials, prices risen massively
  • 60% of wholesalers, 42.5% of retailers report shortages
  • German industry cannot produce as much as they would like

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Considering that the virus situation globally is still in a quagmire and though demand conditions have improved in Europe, the supply chain disruption is something that won’t be fixed any time soon. As such, the imbalance will persist for many more months at least.

Taking that into consideration alongside higher cost inflation, that will pressure economic/business conditions even more than it has over the past few months.

Ifo also warns that the consumer and tourism sectors are worried about another virus wave and with the spread of the delta variant and booster shots a key question in the months ahead, it is a risk worth taking note in case it causes market sentiment to sour.

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