The economic impact on Germany from the Russian invasion of Ukraine will last for years, influential economist Marcel Fratzscher of the German Institute for Economic Research told Reuters, adding that it could cost it as much as 3 percentage points from growth this year.
Fratzscher, whose institute is among those advising the German government on macroeconomic policy, said the impact could last until 2025, when Germany expects to be free of all exposure to Russian gas.
Germany, which for decades prospered from reliable flows of cheap Russian gas, is rushing to reorient itself after the outbreak of war in February.
“The war in Ukraine has done enormous damage to the German economy,” Fratzscher said in an interview, adding that only 1.5 percent of the 4.5 percent economic growth expected at the start of the year is likely to remain.
The impact on inflation, through high energy prices, will also persist for a similar period, although he dismissed estimates that there is reason to curb wages.
“Unions are not as strong as they were in the 1970s,” he said, noting that this year’s projected wage increase of 4.5 percent was well below inflation, which is near 8 percent.
“Even in the coming years, I don’t see any sign that we’re going to spiral into wage growth,” he said.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
