Economic forecast: Ukraine war dampens economic growth |

Status: 04/27/2022 2:52 p.m

In view of the consequences of the war in Ukraine, the Federal Government sees clear risks for the German economy. It expects weaker economic growth for the current year.

The federal government expects the war in Ukraine to have a noticeable impact on the German economy. Growth in 2022 will only be 2.2 percent, said Federal Minister of Economics Robert Habeck (Greens) today at the presentation of the spring projection. That is 1.4 percentage points less than assumed in January’s annual economic report. For 2023, the government now expects growth of 2.5 percent.

“The risks for the economy are clear,” said Economics Minister Habeck: “After two years of the corona pandemic, the war in Russia is adding a new burden. The war against Ukraine and its economic effects remind us that we are vulnerable.”

The Federal Minister of Economics emphasized that the new forecast was calculated without taking into account a possible upcoming energy embargo. Should the EU impose an import ban on Russian energy, this should have a significant impact on economic output. At the same time, Habeck also emphasized that great progress was being made in becoming independent of Russian energy: while Germany received more than 50 percent of its gas supplies from Russia before the war began, this has already fallen to 35 percent.

Stopping Russian energy supplies would be noticeable

Germany will free itself step by step from the bracket of Russian energy imports. However, according to Habeck, a stop in energy supplies would be noticeable and would further heat up the already high energy prices and thus inflation. “At the same time, the federal government is doing everything to preserve the substance of our economy even in difficult times with a targeted protective shield for our companies, which we are now implementing quickly,” Habeck continued.

The federal government expects an inflation rate of 6.1 percent for 2022. “Such rates have so far only been observed during the oil crisis or shortly after reunification,” according to the Ministry of Economic Affairs. For 2023, the government is assuming inflation of 2.8 percent. The estimate from the end of January for 2022 was thus increased by a whopping 2.8 percentage points, and the forecast for 2023 was increased by 0.8 points.

source site