Third wave risk leads German economic advisers to trim 2021 GDP forecast

Germany's economy is set to rebound strongly over the next two years, but a bit less quickly than previously anticipated, due to the risk of a third wave of Covid-19, advisors to the German government said.

A panel of experts which advises German Chancellor Angela Merkel forecast German gross domestic product would expand at a 3.1% pace in 2021, accelerating to 4.0% in 2022.

The new projection for the current year was lower than the 3.7% they had anticipated in November, following a 5% drop in 2020.

In remarks to Bloomberg, Volkwer Wieland, a member of the panel, said: "The greatest risk for the German economy is a possible third wave of infections, if it would lead to restrictions or even closures in manufacturing."

Nevertheless, one of Wieland's colleagues on the panel, Achim Truger, pointed out that how once Germany resolved the snags in its vaccination campaign then those sectors being weighed down by restrictions - such as stores, hotels and restaurants - should contribute to stronger growth.