Institutes are significantly downgrading the economic forecast

Created: 04/13/2022Updated: 04/13/2022 10:20 am

The Ukraine war burdens large parts of the German economy.

This is now also noticeable in the forecasts of the leading institutes.

© Jens Büttner/ZB/dpa

The leading economic research institutes only expect growth of 2.7 percent in Germany this year.

At the same time, they warn that too much government aid could even fuel inflation.

Berlin - Leading economic research institutes have warned politicians to carefully dose aid packages against the high energy prices in order not to further fuel inflation.

“If such aid is given across the board, it will also drive up inflation and torpedo the important steering effect of higher energy prices.

This in turn exacerbates the problems of low-income households and increases the overall economic costs, ”explained the head of the Kiel Institute for the World Economy, Stefan Kooths, on Wednesday.

The large institutes are already expecting an inflation rate of 6.1 percent for 2022, the highest value in 40 years.

Economic forecast further downgraded

They lowered their economic forecast because of the war in Ukraine and the ongoing corona pandemic.

For this year, the researchers only expect growth in gross domestic product of 2.7 percent.

If Russian gas supplies were interrupted immediately, economic output would only increase by 1.9 percent.

In autumn they had predicted growth of 4.8 percent.

With their new forecast, the research institutes are still significantly more optimistic than, for example, the economic experts.

The federal government's advisers have only forecast growth of 1.8 percent for this year - and even a recession if Russian energy imports are stopped.

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The joint diagnosis of the institutes is prepared twice a year, in spring and autumn - by the German Institute for Economic Research, the Ifo Institute, the Kiel Institute for the World Economy, the Leibniz Institute for Economic Research Halle and the RWI - Leibniz Institute for Economic Research Meal.

dpa