Germany: Government forecasts for 1.5% growth and 590,000 employees in employment support program

Russia’s offensive against Ukraine and its aftermath will have a significant impact on development in Germany, according to the federal government.

“On average, we expect 590,000 short-term workers (s.s. kurzarbeit program) this year,” while “economic growth according to our researchers is 1.4 to 1.5%,” said Labor Minister Ubertus Hale. (Hubertus Heil) in Bild am Sonntag. “But the whole issue is on the condition that the war will not escalate and that energy supply will remain.”

The German government had already cut its economic forecasts significantly by the end of January – several weeks before the start of the war in Ukraine. Due to the Corona pandemic, it then estimated economic growth of only 3.6%. The previous government was still expecting 4.1% in the fall of 2021.

However, the Russian invasion of Ukraine and the consequences of sanctions against Russia have completely changed the situation. According to their economic forecasts from the end of March, “economic experts” expect an increase in gross domestic product of only 1.8% this year. According to experts, things could get even worse if the conflict in Ukraine intensifies and imports of Russian energy stop. Last November, they still expected an increase of 4.6%.

Heil assured that if the situation worsens, the federal government will “secure jobs where possible with further targeted financial assistance and short-term employment.”