Germany’s economy grew slightly in the first quarter, but Ukraine has a growing impact
BERLIN (Reuters) – Germany’s economy grew slightly in the first quarter of this year, supported by stronger investment, but the war in Ukraine began to have a growing impact from late February, the Office said on Friday. federal statistics.
Europe’s biggest economy grew 0.2% in the quarter in adjusted terms, the bureau said, adding that net exports had slowed growth. A Reuters poll had indicated growth of 0.1%.
“The economic consequences of the war in Ukraine have had an increasing impact on short-term economic development since late February,” the office added in a statement.
The German government on Wednesday lowered its growth forecast for 2022 to 2.2% from 3.6% forecast in January, as the Russian invasion of Ukraine, sanctions and high energy prices weigh on production . It also raised its inflation forecast for 2022 to 6.1%.
Economy Minister Robert Habeck said the reduced growth forecast did not assume a Russian energy embargo or blockade and that the economy would tip into recession if either occurred.
First-quarter GDP figures for the wider eurozone, where Germany is the largest of 19 economies, are due later Friday.
Commerzbank economist Joerg Kraemer said businesses and consumers were unsettled: “If Russian gas supplies were interrupted, the energy crisis triggered by this would likely cause a deep recession. Economic risks are currently very students”.
A survey released on Wednesday showed German consumer sentiment set to plunge to an all-time low in May as war in Ukraine drives up costs for households and dashes hopes of a post-pandemic recovery.
German chemicals group BASF reaffirmed its 2022 profit forecast on Friday as it passes on soaring raw material costs to its industrial customers, but warned that global conditions were uncertain.
“The market environment continues to be dominated by an exceptionally high level of uncertainty,” the company said.
(Writing by Paul Carrel, editing by Miranda Murray and Catherine Evans)