IMF said in a report that Germany’s GDP growth is expected at 1.2% in 2022 and 0.8% in 2023. Unemployment rate is estimated at 3.1% in 2022 and 3.4% in 2023. Headline inflation is projected at 7.7% in 2022 and 4.8% in 2023.
It added, “uncertainty is very high, with risks to the baseline growth forecast skewed downward and risks to the inflation forecast skewed upward.”
The greatest threat is a “persistent shutoff” of the remaining Russian gas exports to Europe, which could cause “sizable reductions in German economic activity and increases in inflation”.
“Prolonged war and resurging COVID-19 infections could also intensify supply chain disruptions. ”
“Persistently-high inflation and fears of a de-anchoring of inflation expectations can prompt major central banks to tighten policies faster than currently expected”.
