Berlin´s economy in 2021—on the course of recovery
As 2021 comes to an end, it is a good time to reflect on how Berlin´s economy performed during the past year. And, while the Covid-19 crisis remained a great challenge for many markets, Berlin´s GDP and employment situation are catching up on the losses suffered since the onset of the pandemic.
While the Corona crisis forced Berlin's economy to shrink by 3.3 % in 2020 compared to the previous year, the German capital´s GDP growth looks much more prospective: According to the latest forecast of the IBB (Investitionsbank Berlin), it should rise to just under 3% this year. Employment is also growing at a predicted rate of 3.2% in 2021 — more than twice as fast as the national average.
Berlin´s economy has long been an export-oriented industry and this year, it could greatly benefit from a strong upswing in the USA and China: Berlin exports increased by 10.0 % to €13.0 billion in the first ten months.
Berlins strong and fast-growing digital economy (+11.6% in the first half of 2021) and the technical services industry have also greatly contributed to this year´s grwoth of the GDP and ecpecially the employment numers. The demand for skilled workers in these sectors remains high.
It needs to be added that, while the Berlin industry saw strong growths in orders, for a large part of the year, the markets were challenged by shortages and delays in material supplies. This resulted in price increases, in particular for the energy prices.
At the same time, the economy is not unaffected by the renewed restrictions resulting from a never-ending Corona pandemic, in addition to the increasing shortage of skilled workers and acute supply and material bottlenecks.
The hospitality and tourist sectors were still hit by the pandemic also this year. The turnover o the hospitality sector fell by 22.9 % in the first three quarters. Despite a cautious resumption of tourism over the summer, the total number of guests during the first nine months fell by 16.0 % year-on-year.
Retail saw a decline of 17% in the first half of 2021, however, the overall retail sector had a 4.5%-increase, which is mainly owed to the boom in online retail with 38%-increase in turnover.
Construction industry
Building permits for housing slumped by 11.5 % to 14,241 in the first three quarters of 2021 compared to the same perios last year. The consrtuction industry saw shortages in skilled labour and bottle necks in material supply, in particular. Turnover in the main construction sector fell by 9.9 % to 3.1 billion euros.
What to expect in 2022
The IBB forecasts for the next year suggest that the growth could go up to 4 %, depending on how quickly the Covid-19 crisis can be kept at bay. The economic level of 2019 could to be reached again at the beginning of 2022.
Sources: IBB.de | Berlinboxx.de