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The German Government’s Advisory Council of Economists, the so-called “five wise men”, has drastically revised down its growth forecasts for 2022 and 2023.
The committee lowered its forecast for German GDP growth in 2022 from 4.6 percent to 1.8 percent, in the wake of the war in Ukraine.
In November, the sages contemplated GDP growth of more than 4.6 percent for this year, but the repercussions of the war in Ukraine – above all the problems in supply chains and energy prices – have forced this strong correction to the low.
“In November there were indicators that allowed us to expect a strong recovery in the situation. The order books of companies were full and the problems in the supply chains derived from the pandemic seemed to be overcome,” said the economist Achim Truger during the presentation of the report. of the wise men in Berlin.
“Now the war brings new supply problems and companies have problems with rising energy prices,” he added.
Wise men expect inflation in Germany of 6.2 percent in 2022 and 2.9 percent in 2023, which will still be above the ECB’s target according to which price stability is guaranteed with inflation slightly below below 2.0 percent.
Germany’s high dependence on Russian energy supplies brings with it a special risk that, according to economist Volker Wieland, may even lead to a recession accompanied by high inflation.
As a positive aspect, the wise men highlighted that the situation of the labor market will continue to be stable: for this year they expect an unemployment rate of 5.1 percent, after 5.7 percent in 2021, and 4.9 percent for 2023 .
The sages recommend above all to work towards energy independence from Russia with a diversification of supplies and a stronger push for renewable energies.
rml (efe, afp)