4 German economic institutes expect economy to contract in 2023 due to gas crisis

The German Institute for Economic Research (Ifo), the Kiel Institute for the World Economy (IfW Kiel), the Helli Economic Research Institute (IWH), and the Leibniz Institute for Economic Research (RWI) have almost halved their forecasts for German economic growth in the second half of this year, lowering their forecast for 2023 from 3.1% to -0.4%.

The four institutes expect the German economy to grow by only 1.4% this year, compared with their spring forecast of 2.7%.

The statement said, “The crisis in the gas market has had a severe impact on the German economy. Rising gas prices have driven up energy costs dramatically and led to a huge loss of purchasing power.”

Given the risk of a very harsh winter, gas shortages, and a lack of energy efficiency, the four institutes forecast that Germany’s gross domestic product (GDP) will fall by 7.9% in 2023 and by 4.2% in 2024.

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