The International Monetary Fund (IMF) expects only relatively modest growth for the German economy this year and next. Gross domestic product is likely to grow by 1.2 percent in 2022 and then only by 0.8 percent, as the IMF announced in its updated Germany report on Wednesday. “The war in Ukraine creates new headwinds”.
These include a reduction in gas supply from Russia, higher energy prices, shortages of essential inputs, weaker external demand and tightening financial conditions. As late as May, the fund had said growth would slow from 2.9 percent in the previous year to about two percent in 2022 and just over two percent in 2023.
“Challenging”
“We believe this year and next will be a challenge for the German economy,” said IMF Germany expert Oya Celasun. The uncertainty is very great. The biggest threat is a long-term halt to the remaining Russian gas exports to Germany and Europe. This could lead to a significant slowdown in economic activity and more inflation. An annual average increase in consumer prices of 7.7 percent is expected, which is expected to decrease to 4.8 percent by 2023.
Should the situation deteriorate, the government should remain flexible and continue to support the economy and low-income households. Then it should also be considered whether the debt brake should be suspended for another year in 2023, according to Celasun. German Finance Minister Christian Lindner wants to return next year to the rules laid down in the Basic Law, which have been suspended since 2020 due to the corona pandemic.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
