Berlin, March 30, (dpa/GNA) – Economic advisors to the German government see a “substantial” risk of recession as a result of Russia’s invasion of Ukraine, according to their latest economic forecast.
The Council of Economic Experts expects Germany’s gross domestic product to increase by 1.8% in 2022 and by 3.6% in 2023, but the outlook was “subject to very high uncertainty,” it said in a press release.
Due to high energy prices, inflation is expected to rise to 6.1% this year and decrease to 3.4% next year, the expert panel said.
“The war has exacerbated the disruptions of supply chains that were already strained due to the coronavirus pandemic”, said council member Achim Truger.
“At the same time, the once again sharply increasing prices for natural gas and crude oil are significantly affecting companies and private consumption,” he said.
Uncertainty about energy supplies from Russia, of which Germany is a major buyer, meant the situation could also turn much worse than forecast.
“Germany is heavily dependent on Russian energy supplies. A suspension of these supplies entails the risk that the German economy slides into a recession with significantly higher inflation rates”, said council member Monika Schnitzer.
The risk of a recession was “substantial,” council member Volker Wieland said in Berlin.
The coronavirus pandemic continues to pose a risk to growth, the report said.
The council is an independent body mandated with providing an impartial expert view to the government in the form of periodic assessments of macroeconomic developments.
GNA