The war in Ukraine will have a major impact on Germany's economic recovery and will halve the expected GDP growth rate in 2022 to 2.1%, the iFW Keel Economic Research Institute said on Thursday.
The result of the dispute is that GDP “will decrease by about 90 billion euros [$99 billion] this year and next year, and “delay the return to pre-COVID-19 levels of Europe's largest economy for the second half of the year,” economists said.
The previous forecast was a 4% growth rate this year.
IFW, the first agency to publish updated forecasts after Russia's invasion of Ukraine, predicts a record inflation rate of 5.8% for 2022.
“If there is no strong growth momentum after the pandemic, the European economy will shrink this year,” said Deputy Director Stefan Kooths, IFW Deputy Director Stefan Kooths, in a statement.
Germany is benefiting from the “strong recovery effect” associated with the lifting of most health restrictions.” He added.
IFW said: “The war is affecting the economy through increased uncertainty, new tensions in the supply chain, and further increases in raw material prices.” In particular, Energy said.
For example, in the automotive sector, which is the backbone of German industry and economy, production stops occurred due to the shortage of spare parts produced in Ukraine.
Germany's GDP, which had limited the impact of the epidemic due to a 4.6% recession, rose 2.8% last year, considerably less than its neighbors due to industrial supply problems.
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