Germany 2022: Pre-crisis levels will not be reached again everywhere

While overall economic value added in 2022 is expected to exceed pre-Corona levels, sales in key sectors such as automotive, hospitality and tour operators still lag far behind 2019 levels. "Even if the fourth wave of the pandemic was the last to bring significant restrictions to parts of the economy, many industries will still be struggling with the aftermath for a long time. Companies from the information and communication sector, on the other hand, can already be clearly classified as winners of the pandemic", Axel Angermann, chief economist of FERI, summarizes the result of the economic forecast for the new year from an industry perspective. The findings for the industrial sector are divided: In the first half of the year, production development will continue to be slowed down by persistent supply bottlenecks. From the second half of the year, however, FERI expects supply disruptions to become much less relevant. Robust demand and already high order backlogs could then trigger a dynamic increase in production. By the end of 2022, production will have returned to pre-crisis levels, although on an annual average it will still remain well below the level of 2019. The automotive industry, which is suffering from the shortage of semiconductors and was the only one among the major industrial sectors to record another sharp drop in output in 2021, will be particularly hard hit.

Divided outlook in the construction industry

The German construction industry could be one of the winners of the change in government: The target of building up to 400,000 new housing units per year will not be achieved overnight anyway and could also be challenged by tight capacity in the sector. Nevertheless, the expected measures, which are now being coordinated in a separate ministry, should provide a noticeably positive impetus. However, the prospects for commercial construction remain subdued. Above all, the trend towards more home offices in many sectors is limiting demand for office properties. Overall, however, the construction industry can expect a noticeable increase in real sales in the coming year.

Digital economy as winner of the crisis

Among the winners of the pandemic are the IT sector and related industries: Turnover from information technology services is likely to be around 15% higher next year than before the pandemic, as is that from data processing and web portals. The outlook for the retail sector is also positive, with price-adjusted sales expected to increase by 3% in 2022. This will be driven by substantial surplus savings that were forcibly built up during the pandemic and an overall positive labor market trend. However, only a portion of the sales increase will benefit brick-and-mortar retailers. The real winner of the pandemic remains online retail.

Travel industry and hospitality lag behind

The huge increase in sales of more than 50% for travel agencies and tour operators and of more than 40% for the hospitality industry should not hide the fact that these increases are being achieved from a very low level. In both sectors, turnover in the coming year will be significantly below pre-crisis levels. The travel industry in particular is likely to remain burdened by uncertainties potentially emanating from new virus mutations. It therefore seems highly unlikely that tourism, especially to destinations outside Europe, will return to normal next year. The volume of business travel is likely to be significantly lower in the long term than before the pandemic anyway, thanks to experience with digital communication formats.