Lower growth rates – war in Europe is slowing economic recovery

Vice Chancellor and Federal Minister for Economic Affairs and Climate Action Dr Robert Habeck has released the Federal Government’s spring projection today. He will be presenting it at the Federal Press Conference in the early afternoon. According to the projection, the German economy will grow by just 2.2% in 2022. In 2023, growth is expected to amount to 2.5%.

Federal Minister Habeck said: "The risks for the economy are clear. After two years of the COVID pandemic, Russia’s war is a new burden on the economy. The war against Ukraine and its economic repercussions remind us of the fact that we are vulnerable. But one of the strengths of liberal democracies is that we work hard to achieve a balance and thus reach solutions which bring all of us forward. In the last few weeks, we have repeatedly shown that democracies are particularly efficient and capable of acting in the face of the war and other crises, and have rapidly taken numerous measures in order to cope with this new situation. We will resolutely continue on this path so that we will gradually become independent from Russian imports. At the same time, the Federal Government is doing all it can to preserve the substance of our economy in these difficult times. This includes a targeted protective shield for our companies, which will be swiftly implemented."

The Federal Government has corrected its expectations contained in the January annual projection significantly downwards. The outlook has deteriorated primarily due to Russia’s war of aggression against Ukraine. The high energy prices, the sanctions and the increasing uncertainty impact on the growth prospects of the German economy.

The prices for oil, coal and gas, which have risen sharply due to the war, have also been driving up consumer prices in Germany. The Federal Government expects an inflation rate of 6.1% for 2022. Comparable rates were registered only during the oil crisis and shortly after German reunification. According to the Federal Government’s projection, the inflation rate will again be much lower in the coming year (2.8%).