reply German manufacturing rebounded strongly and orders rose as recovery continued

Germany grew sharply in the second quarter compared with the same period last year, thanks to a recovery in consumption and a strong rebound in manufacturing, but has yet to return to levels seen before the COVID-19 outbreak. The new wave of COVID-19 has become the biggest uncertainty facing Germany's economic recovery in the second half of the year. Supply chain tension, rising prices and other factors will also bring new challenges to the economic recovery.Recently, the German Federal Statistics Office released the second quarter macroeconomic data. German gross domestic product grew 1.5 per cent in the second quarter from the previous quarter and 9.6 per cent from a year earlier, data showed. While the growth in the second quarter was substantial compared with the same period last year, German GDP was still down 3.4% compared with the fourth quarter of 2019. This means the German economy has not yet recovered to pre-COVID-19 levels, and the 1.5 per cent month-on-month growth rate is also below previous expectations of around 2 per cent by major research institutes.As the outbreak has eased, quarantine measures in Germany have been eased. In particular, the further lifting of restrictions on service industries such as retailing and catering directly boosted personal consumption. Personal consumption and government spending were the main drivers of growth in the second quarter, according to the Federal Statistics Office. Quarantine measures since the end of last year have greatly curtailed personal consumption. Germany's household savings rate reached 23.2% in the first quarter of this year. This savings will be fully unleashed when the lockdown is lifted, leading to a stronger wave of personal consumption growth and continuing to push the German economy closer to pre-pandemic levels.German manufacturing is showing signs of continuing recovery. The purchasing managers' index continued its recovery to 65.9 in July, according to market researcher Axin-Watson. It is not just in Germany, but also in the eurozone as a whole. The eurozone purchasing managers' index in July was above the line between expansion and contraction for the 13th consecutive month.But while orders for manufacturers continue to grow, tight international supply chains and rising raw material prices are also the biggest concerns for German manufacturers. More than two-thirds of German manufacturers believe that tight supplies of raw materials and components remain the biggest obstacle to boosting production capacity, according to a survey by the Ifo Institute for Economic Research.Ifo Economic Research Institute experts believe that the current supply chain tension may threaten the overall recovery of the macro economy, raw materials and components procurement prices remain high is also a concern. Especially at present, the supply of chip products in the global scope is tight, which has a particularly severe impact on the two major industries of German electronics and automobile. Nearly 85 per cent of companies in both sectors said production had been severely affected.The new wave of COVID-19 has become the biggest uncertainty facing Germany's economic recovery in the second half of this year. At present, the epidemic situation in Germany is relatively mild, but the vaccination rate is far from meeting the requirements of herd immunity and the vaccination speed shows a significant downward trend. In addition, some studies show that the protection rate of vaccine against Novel Coronavirus delta mutant strain has decreased. A series of adverse factors are stacking up, which may have a new impact on the epidemic prevention and control in the second half of this year.No one can predict the impact of a possible new wave of COVID-19 on the German economy, and there are two different views in Germany. Some argue that the government should avoid a repeat of last year's total lockdown this winter and ensure the normal economic activities by giving more freedom to those who have been vaccinated or recovered through measures such as vaccination and vaccination passports. Others believe that if a new wave of the disease strikes, the government may have to re-impose strict lockdown measures to prevent the disease from spreading further. If so, Germany's economy will take another hit in the second half of the year.The recent rebound of the outbreak in other parts of the world has already affected some German companies. Some factories in Asia and other places have been shut down due to the outbreak, and the supply chain tension is likely to continue or even worsen. It can be seen that dealing with the negative impact of the epidemic remains the biggest challenge for the German economy in the second half of this year.There are also growing concerns about recent price rises in Germany. For some time now, the European Central Bank (ECB) has adopted a relatively loose monetary policy to help member countries recover. The prevailing view was that price rises in the eurozone and Germany would be temporary, with little chance of triggering systemic risk. But recent data from the Federal Statistics Office showed that German consumer prices are expected to have risen 3.8 per cent month-on-month in July, significantly higher than previously thought, raising concerns. Some research institutions believe that German prices have been rising too fast for a long time. If the German government continues to stimulate the economy through increased public investment, the level of price rises could continue to rise, posing a new challenge to the recovery.