FRANKFURT – The Council of Economic Advisers to the Federal Government drastically reduced its growth forecasts, which point to Russia’s war against Ukraine and rising energy prices.
The largest economy in the euro zone is now expected to grow by 1.8 percent this year, after 4.6 percent previously. The council said the German economy is unlikely to return to pre-pandemic levels before the third quarter.
For the next year, consultants expect GDP growth of 3.6 percent.
Inflation is expected to rise to 6.1 percent this year, more than three times the European Central Bank’s price stability target, before falling to 3.4 percent in 2023.
The outlook is subject to a very high degree of uncertainty. The Council warned that a further intensification of the conflict in Ukraine and an increase in sanctions against Russian companies could put additional strain on the German and European economy.
“Germany is heavily dependent on Russian energy supplies. If these deliveries are suspended, there is a risk that the German economy will slide into recession with significantly higher inflation rates,” said State Councilor Monika Schnitzer.
https://www.politico.eu/article/german-government-economic-council-cuts-growth-forecast-by-half/?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication Economic Council of the federal government cuts growth forecast in half – POLITICO