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Price labeling at the vegetable stand in Frankfurt am Main
Photo: Frank Rumpenhorst / dpa
Now the Ifo Institute has drastically cut its forecast for economic development in Germany.
Munich economic researchers expect economic output to shrink by 0.3 percent in the coming year – and consumer prices to rise by an average of 9.3 percent.
For the current year, too, the researchers now only expect growth of 1.6 percent.
Inflation is likely to be 8.1 percent for 2022 as a whole.
Compared to the previous forecast from June, the institute thus significantly lowered its growth forecast for 2023 by 4.0 percentage points and increased the inflation forecast by a substantial 6.0 percentage points.
"These are unusually high changes in such a short period of time," says the head of the Ifo economic forecasts, Timo Wollmershäuser.
The coming months in particular will be decisive for this development.
"We're going into a winter recession
,
" says Wollmershäuser.
The energy suppliers noticeably adjusted their electricity and gas prices to the high procurement costs, especially at the beginning of 2023.
That will even push up the inflation rate to about eleven percent in the first quarter.
»The cuts in gas supplies from Russia in the summer and the resulting drastic price increases are hampering the economic recovery after Corona.
We do not expect things to return to normal until 2024, with growth of 1.8 percent and inflation of 2.5 percent,” says Wollmershäuser.
As a result, real household incomes are likely to fall sharply and purchasing power will fall noticeably.
Ifo researchers believe that the government's third relief package should counteract this decline somewhat, but by no means offset it.
“The loss of purchasing power, measured by the decline in real per capita wages by around three percent this year and next, is higher than it has ever been since today’s national accounts began in 1970,” says Wollmershäuser.
The institute expects that the price increase will gradually weaken over the course of the coming year.
The researchers assume that there is enough gas available in winter.
For this reason, energy prices should not continue to rise and should fall again by spring 2023 at the latest.
However, the Institute does not expect any serious effects on the labor market.
The increase in employment will only slow down temporarily.
The forecast increase in the number of unemployed by a good 50,000 in the coming year is primarily due to the sharp increase in unemployed Ukrainian refugees in the summer of 2022, who are only gradually being integrated into the labor market.
fdi
