GDP growth of 3.5 percent and export plus of 4 percent in 2022

The Federation of German Industries (BDI) is cautiously optimistic about the economic recovery in industry. "Order books are full, but production is not keeping pace with demand. Pandemic-related restrictions and supply bottlenecks are affecting large parts of the economy," BDI President Siegfried Russwurm said in Berlin on Thursday. The economy could face another stop-and-go year. With the right framework conditions, however, there is also a chance that the new year will be the year with the strongest economic momentum since 2010.

For Germany, the BDI expects GDP growth in the order of 3.5 percent this year – after 2.5 percent last year. German exports would probably increase by four percent this year compared to last year – and thus by just half as much as last year.

According to the BDI, industry is facing massive disruptions to its global supply chains. Many companies in the automotive, electrical and mechanical engineering industries are suffering from supply bottlenecks. "These bottlenecks will slow down industrial value creation by more than 50 billion euros in each of 2021 and 2022," Russwurm said. "Despite full order books, a lack of microchips, components and raw materials will continue to affect production for some time."

In view of the risks, he said, the economy is all the more dependent on reliability and predictability – also in the SME sector: "The top political priority this year must be to strengthen industry, exports and innovation. After all, industry will continue to be the engine that drives our country's economy and prosperity in 2022," emphasized the BDI President.

For an industrialized nation that faces global competition day after day, merely maintaining activities is not enough, Russwurm said. Even a return to pre-crisis levels is not enough, he added: "Policymakers must reverse the negative trend of recent years, go beyond crisis management to increase the pace of action and embark on a growth course."

The BDI President called on the new federal government to work swiftly and with all its might to implement progress: "Now is the time to prove how much awakening there really is in the traffic-light government and whether it lives up to its self-imposed claim to be a 'progress coalition'." High energy costs, sluggish digital transformation, lack of infrastructure investment, crippling government and high taxes – all of which make the business location less and less attractive for companies from Germany and abroad, he said.

The omicron variant is a risk to economic recovery, he said. "For an industrialized nation competing internationally, there is an urgent need for a unified, evidence-based long-term plan to contain the pandemic," the BDI President warned. Above all, he demanded more reliable data in the Corona-management of policymakers at the federal and state levels. For the world's fourth-largest economy, he said, it is completely unacceptable that health authorities do not provide figures – or do so too late –, that testing centers are not working at full speed, or that systematically collected data on Corona patients in intensive care units is lacking.

"More data would accelerate the end of the pandemic and more effectively close the gaps in the vaccination campaign," the BDI President said. Vaccination is still the best medicine against the virus. In the interest of all, Germany should therefore not refuse – after careful consideration – to make vaccination mandatory as a last resort.

The acute Corona crisis must not be allowed to develop into a chronic economic and social crisis. "We must succeed in using the crisis as an opportunity and emerge from it stronger. Let's create not just a 'new normal,' but a 'better normal,'" Russwurm emphasized. It must be about organizing progress in time for life after Corona, he said. "Complex transformations such as digitization or decarbonization cannot be shaped without the economy, but only with it."

With a view to climate neutrality by 2045, the BDI President called for more government commitment. "The government must ensure that investment in climate protection by companies and citizens is worthwhile again – with super write-offs, massive and rapid infrastructure expansion and faster planning and approval procedures. When it comes to implementing the energy transition, we need to think in months instead of years from now on."

Climate policy can only be successful internationally. Russwurm therefore called on the German government to advocate more international cooperation in the fight against climate change, for example by founding climate clubs, during the German G7 presidency that started a few days ago. Germany will remain an energy importing country, he said, even if energy sources will be CO₂-neutral in the long term. Strategic sovereignty and non-blackmailability remain a core task of German foreign and economic policy in this dimension as well.

According to the BDI, business depends on a modern state with a user-friendly, agile and digital administration. Companies are power users of the authorities – with an average of more than 200 contacts per year. Russwurm: "It needs less burdens, less bureaucracy, less taxes – and better infrastructure, more incentives for innovation and investment."