Economic development: Leading institutes: The energy embargo threatens recession – and half a million more unemployed
Berlin The leading German economic institutes estimate that stopping Russian energy supplies would cause the German economy to shrink. “In this case, the German economy is likely to fall into a sharp recession next year,” says their joint economic forecast for the Federal Ministry of Economics, excerpts of which are available to the Handelsblatt.
In the scenario of an immediate embargo, gross domestic product (GDP) will fall by 2.2 percent in 2023, economists estimate. The economic slump would be strongest in the second quarter of 2023 with a minus of almost five percent.
The number of unemployed would increase by 418,000 compared to the previous year. The unemployment rate has long since reached the 6 percent mark again, according to the forecast. The inflation rate for the full year would be five percent.
>> Also read here: EU argues about oil embargo – these countries are blocking it
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In 2022, the economy would still grow despite the embargo, the forecast for gross domestic product for the current year is plus 1.9 percent. However, the inflation rate at 7.3 percent would be higher than previously assumed.
The so-called community diagnosis is to be officially presented on Wednesday. The report is being prepared by the RWI in Essen, the DIW in Berlin, the Ifo Institute in Munich, the IfW in Kiel and the IWH in Halle.
growth despite the war
Should there not be a delivery stop, Germany would not fall into a recession. However, the institutes are expecting significantly less growth than previously assumed as a result of the war in Ukraine. GDP is likely to grow by 2.7 percent this year, people familiar with the spring forecast told Reuters on Tuesday.
In October 2021, 4.8 percent had been estimated because a strong recovery from the corona crisis was expected. Growth of 3.1 percent is now expected for 2023, after 1.9 percent so far.
More: Bundesbank expects noticeable strain on the economy