Berlin, Mar 30 (AP) The German government’s panel of independent economic advisers on Wednesday slashed its 2022 growth forecast for Europe’s biggest economy in light of Russia’s invasion of Ukraine and concern over energy supplies and prices.
The group forecast that Germany’s gross domestic product will expand by only 1.8 per cent this year, compared with the 4.6 per cent it predicted in November. It said the economy won’t return to its pre-pandemic level until the third quarter.
Last year, the country’s GDP grew by 2.9 per cent; in the final quarter of 2021, it shrank by 0.3 per cent compared with the previous three-month period.
The high dependence on Russian energy supplies entails a considerable risk of lower economic output and even a recession with significantly higher inflation rates, the panel said.
The economists said in a statement that Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies and quickly end its dependence on Russian energy sources.
They added that in the long term, the goal must be to ensure higher energy security, for example by expanding renewable energies and diversifying energy imports.
Those steps reflect the German government’s policy.
Shortly before the economists released their forecast, Germany triggered an early warning level for natural gas supplies amid concerns that Russia could cut off deliveries unless it is paid in rubles.
The panel of advisers forecast growth of 3.6 per cent in 2023.
In a separate report Wednesday, the Federal Statistical Office estimated that Germany’s year-on-year inflation rate leapt from 5.1 per cent in February to 7.3 per cent in March.
It pointed to the effect of the war on gas and oil prices, as well as bottlenecks caused by delivery chain interruptions due to the pandemic.(AP)