The Kiel Institute for World Economy (IfW) has cut its growth forecast for Germany by 2022 due to the war in Ukraine and now estimates that the country’s GDP will grow by only 2.1%, compared with 4 % originally predicted. Inflation, according to the same estimates, will be around 5.8%, the highest level since German reunification.
According to the IfW announcement, the shock in Ukraine is delaying the return to pre-pandemic levels in the second half of the year, while Germany’s production capacity remained underutilized, leading to production below existing capacity. Next year, part of the production that has already been lost will have to be replenished and the economy will grow at a rate of 3.5%.
The economic turmoil resulting from the war in Ukraine could cost Germany a total of 90 billion euros in lost production this year and next, the institute estimates.
Source: Capital
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