Germany’s IfW predicts 0.5% GDP growth in 2023 amid stubbornly high inflation

GERMANY’S IfW economic institute said on Wednesday (Mar 15) it did not expect a strong economic recovery in 2023 due to continued losses in consumer purchasing power as a result of stubbornly high inflation.

The Kiel-based researchers raised their growth forecast for 2023 from 0.3 per cent to 0.5 per cent. The German government is predicting growth of 0.2 per cent. For 2024, the institute upgraded its growth forecast from 1.3 per cent to 1.4 per cent.

“The German economy is struggling to emerge from the energy crisis,” the IfW said in its spring forecast. “The economic consequences of the war in Ukraine have stalled the recovery from the pandemic and noticeably depressed the level of gross domestic product.”

According to the report, consumer prices are set to rise by 5.4 per cent this year, and by 2.1 per cent in 2024.

“High inflation is reducing households’ disposable incomes and leading to a decline in private consumer spending in the current year,” the IfW said. REUTERS

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