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German business less optimistic on 2021 GDP growth than government

·2-min read
FILE PHOTO: A worker is seen behind scaffoldings at a construction site in Berlin

BERLIN (Reuters) - Germany's DIHK Chambers of Industry and Commerce said on Wednesday it slightly raised its growth forecast for Europe's largest economy to 3% this year after its recent survey pointed to improved business morale over the past three months.

The DIHK's updated growth forecast compares with its previous estimate of 2.8% projected in February and is based on the latest findings of the association's survey among more than 27,000 companies from various sectors of the economy.

The DIHK forecast is less optimistic than the government's projection of 3.5% GDP growth this year. The German economy shrank by 4.8% last year due to the pandemic.

"There is cautious optimism among export-oriented industrial companies due to economic catch-up effects, but there is still a considerable amount of scepticism, particularly among the sectors affected by the lockdown, due to ongoing coronavirus restrictions," DIHK said in a summary of its survey.

Among the companies most upbeat were manufacturers of vehicles, machinery and electrical engineering products.

"One possible reason is the economic recovery in important sales markets such as China and the United States, which is boosting demand for "Made in Germany" goods," the DIHK said.

The survey revealed supply shortages of semiconductors and other industrial components which two out of five companies described as one of the biggest risks for their growth outlook.

"Delivery bottlenecks, trade restrictions and high global demand are currently causing prices to rise sharply, for example for wood, plastics, building materials and steel," DIHK said.

The DIHK survey chimes with the findings of the smaller, but more frequent Ifo business sentiment survey that showed how the third wave of COVID-19 infections and supply bottlenecks are complicating the economic recovery.

(Reporting by Michael Nienaber; Editing by Riham Alkousaa and Maria Sheahan)