Winter recession and higher inflation predicted for Germany
One of Germany's leading economic research institutes has cut its forecast for growth in the coming year, and predicted a winter recession for Europe's largest economy.
The ifo institute said in its autumn forecast released that it expects economic output to rise by 1.6% this year as a whole, and to shrink by 0.3% next year.
Inflation meanwhile is expected to average 8.1% this year and 9.3% next year.
"The cuts in gas supplies from Russia over the summer and the drastic price increases they triggered are wreaking havoc on the economic recovery following the coronavirus," said Timo Wollmershäuser, who is ifo's head of forecasts.
"We don't expect a return to normal until 2024, with 1.8% growth and 2.5% inflation," he said.
Compared with a June forecast, ifo has lowered its growth forecast for 2023 by 4 percentage points and raised its inflation forecast by 6 percentage points.
Energy prices should stop rising and should start falling again from spring 2023 at the latest, ifo said.
Clemens Fuest, the head of the institute, told the Tagesspiegel newspaper that energy prices would sink in the long term because Russia would be selling its gas and oil to other countries.
These states would in turn buy less gas from other sources, which "will then flow to Europe," he said.
The economist advocated a substantial offer of state support for businesses as the energy crisis continues.
"The offer has to be big, but that doesn't mean it will be fully taken up," he said, arguing that businesses overall may not need as much help as they did during the height of the coronavirus pandemic.
Notice: No person, organization and/or company shall disseminate or broadcast the above article on Xinhua Silk Road website without prior permission by Xinhua Silk Road.
A single purchase
