Germany slashes GDP prospects for 2022

Business Wednesday 30/March/2022 16:20 PM
By: DW
Germany slashes GDP prospects for 2022

Berlin: Germany on Wednesday slashed its 2022 growth forecast in light of Russia's invasion of Ukraine amid concern over energy supplies and prices.

The federal government's panel of independent economic advisers has forecast that Germany's gross domestic product (GDP) will expand by only 1.8% this year.

Europe's largest economy had hoped to begin its recovery from the coronavirus pandemic after two years in the doldrums. In November the advisory panel predicted a 4.6% jump for 2022, but that has now been reeled in since Russia declared war on its neighbor.

Last year, Germany's GDP grew by 2.8%, but in the final quarter of 2021, it shrank by 0.7%, compared with the previous three-month period.

"Russia's war of aggression against Ukraine and energy prices are drastically worsening the economic outlook," the panel said in their report.

"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 economic experts went on to say 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."

The group 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."

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.

German Economy Minister Robert Habeck called on businesses and individuals to try and reduce their energy consumption as much as possible as the country tries to curtail its dependence on Russian gas.

Meanwhile, Germany is set to unveil its March inflation data later on Wednesday.