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war | Ifo forecast: significantly lower economic growth

The Germans suffer the consequences of the war in Ukraine especially when shopping and at the petrol station. But the economy is also suffering from high prices. The Ifo Institute expects significantly less growth this year.

In view of the Russian attack on Ukraine and the resulting sharp rise in energy prices, the Munich Ifo Institute has significantly lowered its economic forecasts. Economists have cut their economic growth forecasts for this year to 2.5%. In March, shortly after the war began, the institute still expected German economy growth of 3.1%.

For the next year, economic researchers speculate that the economy will grow 3.7 percent. “Economic output is currently still 1% below the pre-crown level at the end of 2019,” says Timo Wollmershäuser, head of Ifo economic forecasts, according to a statement. “However, we expect a gradual decline in commodity prices and material bottlenecks in the second half of the year.”

Experts predict nearly 7 percent inflation

According to the researchers, inflation is likely to rise to 6.8 percent and only fall to 3.3 percent next year. In March, they still expected an inflation rate of between 5.1 and 6.1 per cent. At the end of 2021 they had even assumed 3.3 percent.

Ifo chairman Clemens Fuest said in an interview with t-online in late April that he expected inflation rates to continue to rise. “Inflationary pressure will remain high in the coming months,” Fuest said at the time. “A lot of companies are just planning to raise prices.”

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