economy after the war
Economists expect drastic economic slowdown and 6% inflation
Situation: 10:44 am | Reading time: 2 minutes
“The end result will be a huge loss of purchasing power for consumers in Germany”
“War in Ukraine will cost us growth,” says Prof. Dr. Timo Wollmershäuser, head of economic research at the Ifo Institute. He comments on inflation in Germany. “Inflation will be significantly higher this year,” said the economics expert.
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Due to the war in Ukraine, the German government’s Advisory Board is significantly lowering its forecasts. Instead of 4.6%, economic output will only increase by 1.8% in 2022. The inflation rate will hit new records.
Because of the aftermath of the war in Ukraine, economists have significantly reduced their economic forecasts for this year. The German Council of Economic Experts now only expects gross domestic product growth of 1.8%, as the federal government’s advisory body announced Wednesday in Berlin. An increase of 3.6 percent is forecast for next year.
Last November, economists still expected growth of 4.6% for 2022. Several institutes had recently corrected their forecasts downwards. Businesses are burdened, for example, by supply bottlenecks and rising energy prices.
Russia’s war of aggression against Ukraine is hurting growth, contributing to further increases in energy and consumer prices and leading to a high level of uncertainty, according to the German Council of Economic Experts. Due to high energy prices, inflation is likely to rise to 6.1% this year and fall to 3.4% next year.
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“Germany is heavily dependent on Russian energy supplies. Stopping these deliveries carries the risk that the German economy will enter a deeper recession and inflation will rise further,” said Monika Schnitzer, a member of the German Council of Economic Experts.
Germany must immediately make every effort to arm itself against the freezing of Russian energy supplies and end its dependence on Russia.
The federal government announced the first phase of a gas emergency plan on Wednesday. Russia requires deliveries of Russian gas to Western Europe to be paid for in rubles. Germany and other Western countries reject this.
The Council of Economic Experts advises politicians. Specialists are colloquially called economists.
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