German economists cut growth outlook

Economic advisers to the German government cut their growth forecasts for 2022 on Wednesday, warning that war in Ukraine and soaring energy prices would weigh on Europe’s largest economy.

The German Council of Economic Experts said it now expects gross domestic product (GDP) to grow just 1.8% year-on-year, down from an earlier forecast of 4.6%.

“Russia’s war of aggression against Ukraine and energy prices significantly deteriorate the economic outlook,” they said in their latest report.

Experts, whose forecasts are closely watched by Chancellor Olaf Scholz’s government, said they saw inflation peak at 6.1% in 2022 as energy costs and supply chain disruptions supplies continue to drive up prices around the world.

For 2023, the panel sees inflation falling back to 3.4%, while economic output is expected to rebound by 3.6%. Germany is due to release its March inflation data later on Wednesday.

The conflict in Ukraine has derailed Germany’s hopes of finally getting rid of the coronavirus pandemic and returning to growth.

With its export-oriented industries, Germany has been particularly vulnerable to supply chain bottlenecks and raw material shortages caused by the pandemic, and its recovery has lagged behind earlier times. other major European economies such as France and Italy.

“The war is putting additional strain on supply chains already strained by the coronavirus pandemic,” said panel member Achim Truger.

“At the same time, the prices of natural gas and oil, which have risen sharply again, are weighing on businesses and private consumption.”

James R. Rhodes