An immediate interruption to Russian natural gas supplies would risk €220 billion ($239 million) in losses to Germany’s economic output for 2022 and 2023, equivalent to more than 6.5% of its annual economic output, according to a joint report on Wednesday.
'The German economy is steering through difficult waters and faces the highest inflation rates in decades,' said the report that was prepared by five institutions.
It lowered the country’s economic growth forecast to 2.7% from 4.8% for 2022 and said it estimated Europe's largest economy would expand 3.1% in 2023.
If the energy supply would stop abruptly, Germany’s economy is expected to grow only 1.9% this year, according to the report.
'The shockwaves from the war in Ukraine are weighing on economic activity on both the supply side and the demand side,' Stefan Kooths, vice president and research director of business cycles and growth at the Kiel Institute for the World Economy, said in a statement. “Increasing prices of critical energy commodities following the Russian invasion further fuel the upward pressure on prices.'
'Fading pandemic restrictions are supporting the service sectors while continuing supply chain bottlenecks in the wake of the COVID-19 crisis are still disturbing manufacturing output,' he added.
The Joint Economic Forecast report was prepared by the German Institute for Economic Research (DIW Berlin), the ifo Institute (Munich), the Kiel Institute for the World Economy (IfW Kiel) and the Halle Institute for Economic Research (IWH), and RWI (Essen).
By Ovunc Kutlu