The consequences of the corona pandemic will continue to weigh on the German economy for much longer than expected.

This is the central message of the Federal Government's new annual economic report, which was first produced under the aegis of Economics and Climate Protection Minister Robert Habeck (Greens).

While his predecessor Peter Altmaier (CDU) still assumed at the end of October that gross domestic product, or GDP for short, would grow by 4.1 percent this year, Habeck now has to correct this forecast downwards.

Only 3.6 percent growth is expected.

Julia Loehr

Business correspondent in Berlin.

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Due to Corona, the start of the year was “still subdued, especially in the service sectors”, the ministry states.

Industry associations from retail and gastronomy had reported up to 50 percent fewer customers in the past few weeks than before Corona.

They are pushing for the 2G or 2G plus restrictions to be relaxed.

When Germany wants to follow other European countries in this regard was not only left open in the last federal-state round of talks.

The annual economic report also only says that the economic recovery will pick up speed again in the further course of the year “after the assumed flattening of the infection rate and the associated lifting of the restrictions”.

On the other hand, the forecast for the inflation rate for this year has been corrected upwards.

In autumn, the federal government had still hoped that in 2022, at 2.2 percent, it would again be close to the target set by the European Central Bank.

Now there is talk of 3.3 percent.

"The delivery bottlenecks, especially for intermediate goods such as semiconductors (...) remain a key price-driving factor," says the report.

"Here, a gradual relaxation can only be expected in the course of 2022." The forecast for the unemployment rate of 5.1 percent remains unchanged compared to the autumn.

The short-time work allowance, which has been extended again and again, means that only a few people in Germany are losing their jobs because of the crisis.

Many growth-critical formulations deleted

It is “obvious that the economic consequences will last longer than the immediate health crisis,” the report continues.

Therefore, further "significant" fiscal and financial policy support will be required.

This indicates that the simplified access to short-time work benefits and the bridging aid for companies are likely to be extended again beyond the end of March.

In addition to the assessments of the economic situation, the exciting question was how Habeck would implement his goal of no longer tying the state's prosperity to GDP and its growth.

In a draft of the annual economic report, the ministry's new top management – ​​including the co-founder of Attac Germany and now State Secretary Sven Giegold – struck a tone that was unusually growth-critical for an economics ministry.

Among other things, it was read there that capitalism lacks a systematic anchoring of sustainability goals.

It was also questioned whether a constant increase in per capita consumption was still justifiable.

However, many of these formulations can no longer be found in the final version agreed with the other ministries.

This starts with the title of the report, which no longer contains the wording "Advance the regulatory framework in a climate-friendly manner".

Instead, the premise of Habeck's social-ecological market economy is now "design transformation innovatively".

The original assessment that capitalism in general and the German social market economy lacked a systematic anchoring of sustainability goals was also dropped.

The word capitalism no longer appears at all, for better or for worse.

Environment and equity taken into account

However, the fact that a binding ecological regulatory framework is required and also a re-evaluation of economic policy priorities is also part of the report.

As is the special chapter G: “Sustainable and inclusive growth – making dimensions of welfare measurable”.

In the coalition agreement, the SPD, the Greens and the FDP agreed to integrate expanded reporting on prosperity into the annual economic report, which also takes environmental and justice aspects into account.

"Overall economic growth, measured in terms of growth in gross domestic product, is a necessary but by no means sufficient prerequisite for sustainable prosperity, employment, participation and social security," says the relevant section.

More than 30 individual indicators are listed in five dimensions - growth, environment, education, social affairs and public finances - such as the wage gap between men and women or the nitrate pollution in groundwater.

In the years to come, this part of the report is to be given greater weight.

In the opposition, this is only moderately well received.

"The growth-critical swan song of the social market economy introduced by Minister Habeck is out of place," said Julia Klöckner, economic policy spokeswoman for the CDU/CSU parliamentary group.

Climate protection and GDP growth are not mutually exclusive: CO2 emissions have fallen significantly since 1990, but GDP has risen.