In the latest monthly report, Bundesbank presented the scenario analysis on the impact of further escalation of invasion of Ukraine, with the assumption that trade with Russia, including energy imports, will be suspended.
Germany GDP could be up to -5% lower than March forecast by the ECB. Comparing to 2021, GDP would fall by almost -2% in 2022.
Price incase could be significant, with inflation 1.5% higher in 2022, and 2% higher in 2023 than ECB forecast. “The upward risks of inflation predominate, since price increases in downstream production stages or wage increases could be greater.”
