Supply bottlenecks could delay German recovery, institute warns

An economic research centre found that Bottlenecks in the supply of raw materials could cost Germany a rapid recovery from the economic impact of the pandemic. This is because two-thirds of the sectors in the economy reporting supply constraints.

40% of industry groups surveyed reported severe short-term supply disruption. This is stated according to the report by the respected German Economic Institute, reported by Handelsblatt newspaper. A further third were seeing more modest disruption. Severe disruptions were reported by the sectors. These inputs range from microchips and wood for construction, including the car and plastics industries as well as the textile, leather and construction industries.

The institute warned that the rapid pace of vaccination in Europe’s largest economy, would likely unleash sharp demand growth and this might end up highlighting the supply problems. The report stated that with social and economic normalisation once again on the agenda, they are thankful to the progress on vaccination unleashing pent-up consumer demand; these bottlenecks could slow the recovery.