German industry association slashes economic forecast to 1.5 pct-Xinhua

German industry association slashes economic forecast to 1.5 pct

Source: Xinhua| 2022-06-21 22:07:45|Editor: huaxia

BERLIN, June 21 (Xinhua) -- The Federation of German Industries (BDI) on Tuesday slashed its 2022 economic forecast to 1.5 percent due to the Russia-Ukraine conflict and the effects of the COVID-19 pandemic.

Before the start of the Russia-Ukraine conflict, the industry body of Europe's largest economy had assumed gross domestic product (GDP) to grow around 3.5 percent this year.

"A recovery in the sense of a return to pre-crisis levels cannot be expected until the end of the year at the earliest," said BDI President Siegfried Russwurm. Even if the economy caught up with pre-COVID-19 levels, there were still three years of missed growth.

Last week, Germany's leading economic institutes IfW Kiel and ifo already lowered their 2022 economic forecasts to 2.1 percent and 2.5 percent, respectively.

To continue the recovery, Germany would rely on continued gas supply from Russia. "The reduction of Russian gas exports worries us. A disruption would have a disastrous impact on the manufacturing industry and would inevitably send our economy into recession," warned Russwurm.

If gas supplies were cut off, around two in three energy-intensive companies in Germany would cut or even halt production, according to an industry survey by the Institute for Employment Research (IAB). Among non-energy-intensive companies, the figure was still more than one in five.

Following the initial slump caused by the Russia-Ukraine conflict, German industrial production in April recovered slightly by 0.7 percent, according to preliminary figures by the Federal Statistical Office (Destatis).

"The order backlog remains at a record high in the industry, and capacity utilization is also high. But production has been impaired, in some cases significantly, due to existing supply bottlenecks," Russwurm said.