(Reuters) – It was Wednesday, and the German government cut its forecast for Europe’s biggest economy because of the uncertainty caused by Russia’s invasion of Ukraine.
Experts who help the German government figure out how much money it needs to spend each year have lowered their country’s GDP estimate for 2022 from 4.6% to 1.8%. They also said that the economy won’t be back to normal until the third quarter of the year.
According to the four experts, Germany’s GDP should expand by 3.6 percent in 2023.
“Prior to the onset of the war, increased industrial output and a healthy labour market indicated that the economy was on the mend. Russia’s actions against Ukraine have significantly deteriorated economic circumstances. “In a statement, the experts said.
Russia’s invasion of Ukraine on Feb. 24 exacerbated supply chain strains already exacerbated by the COVID-19 epidemic, they claimed, while a dramatic increase in natural gas and crude oil prices impacted businesses and individual spending.
As a consequence, the council anticipates that inflation will peak at 6.1 percent in 2022 and then dip to 3.4 percent the following year.
It also might hurt the German and European economies more if the crisis gets worse and new sanctions are put in place.
“Germany should immediately pull out all the stops to prepare for a potential disruption in Russian energy supply while also rapidly reducing its reliance on these imports,” council member Volker Wieland said.
In this manner, the council said, Germany’s energy security might be enhanced in the long run, even if energy costs remain excessive for some years.
