ifo Institute cuts German GDP growth forecast to 2.2-3.1 pct-Xinhua

ifo Institute cuts German GDP growth forecast to 2.2-3.1 pct

Source: Xinhua

Editor: huaxia

2022-03-24 02:20:13

A vehicle runs past a gas station in Berlin, capital of Germany, March 11, 2022. (Xinhua/Shan Yuqi)

The ifo Institute expects inflation to rise faster than previously projected, reaching between 5.1 percent and 6.1 percent in 2022, compared to the previously assumed 3.3 percent.

BERLIN, March 23 (Xinhua) -- The ifo Institute, a Munich-based think tank, on Wednesday cut its economic growth forecast for Germany, expecting the country's gross domestic product (GDP) to only rise by between 2.2 percent and 3.1 percent in 2022.

The Russia-Ukraine crisis is "curtailing economic growth and accelerating inflation in Germany," it said. Back in December 2021, the institute still projected 3.7 percent German GDP growth for this year.

A pedestrian stands in front of a shopping window of a shop in Berlin, capital of Germany, Feb. 11, 2022. (Photo by Stefan Zeitz/Xinhua)

Due to the prevailing uncertainties, the institute outlined two scenarios for the evolution of energy prices. "This year, energy prices are having a particular impact on private consumer spending," it said.

The optimistic scenario assumes that oil prices would gradually fall from the current level of 101 euros (111 U.S. dollars) per barrel to 82 euros by the end of the year. In the pessimistic scenario, oil prices would continue to rise to 140 euros per barrel by May and would only fall to 122 euros by the end of the year.

The ifo Institute expects inflation to rise faster than previously projected, reaching between 5.1 percent and 6.1 percent in 2022, compared to the previously assumed 3.3 percent. Germany would lose around six billion euros in purchasing power as a result of rising consumer prices in the first quarter alone.

Photo taken on March 18, 2022 shows diesel and gasoline prices displayed on a board at a gas station in Frankfurt, Germany. (Photo by Armando Babani/Xinhua)

However, "full order books in manufacturing and the normalization of the coronavirus pandemic should give the economy a major boost," said Timo Wollmershaeuser, head of forecasts at ifo. (1 euro = 1.10 U.S. dollars) 

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