Germany’s economy could fall into a “sharp recession” if the country immediately stops importing Russian natural gas. So say economists from five leading German research institutes.
According to the experts, the war in Ukraine is already causing much slower growth in the German economy this year than previously expected.
The growth forecast for Europe’s largest economy, and the Netherlands’ most important trading partner, has been revised downwards to 2.7 percent. Previously, the institutes counted on a plus of 4.8 percent. Instead, a growth of 3.1 percent is forecast for next year.
The economists speak of a “shock wave” for the economy from the war in Ukraine. The sharp rise in energy prices, for example, is driving inflation, which is putting pressure on the purchasing power of households. Germany is very dependent on Russia for its gas, oil, and coal. The German industry association for energy companies states that a timetable must be drawn up to break free from Russian gas.
The estimate comes from the Institut für Wirtschaftsforschung in Berlin, Ifo in Munich, the Institut für Weltwirtschaft in Kiel, the Leibniz-Institut für Wirtschaftsforschung in Halle and RWI in Essen. They publish a forecast twice a year that is highly valued. The findings also form the basis for estimates by the German government.