The Ifo Institute expects inflation rates to continue to rise and economic output to fall in Germany.
For this year, Munich economists expect inflation of 8.1 percent and next year of 9.3 percent. According to the Ifo economic forecast presented in Berlin on Monday, the economy will grow by only 1.6 percent this year and will even decrease by 0.3 percent next year.
“We are entering a winter recession,” said Ifo’s head of economic research, Timo Wollmershäuser. The cut in gas supplies from Russia and the subsequent price increase “has damaged the post-Corona economic recovery,” he said. “We don’t expect to normalize until 2024, with growth of 1.8 percent and inflation of 2.5 percent.”
Energy suppliers adjusted their electricity and gas prices for higher procurement costs at the beginning of next year. That will raise the inflation rate to around 11 percent in the first quarter. As a result, real household incomes fell sharply and purchasing power declined sharply, according to economic researchers. The aid package is unlikely to cover this remotely. “The loss of purchasing power, measured by a decline in real wages per person of around 3 percent this year and next, is higher than it has been since today’s national accounts began in 1970,” said Wollmershäuser.
However, the Ifo Institute does not expect any major effects on the labor market. The increase in employment will decrease only temporarily. The number of unemployed is likely to increase by 50,000 in the coming year. But that is mainly due to Ukrainians, who are gradually being integrated into the labor market.
© dpa-infocom, dpa:220912-99-726409/4 (dpa)