BERLIN – The German government's panel of independent economic advisers on Wednesday slashed its 2022 growth forecast for Europe's biggest economy in light of Russia's invasion of Ukraine and concern over energy supplies and prices.
The group forecast that Germany's gross domestic product will expand by only 1.8% this year, compared with the 4.6% it predicted in November. It said the economy won't return to its pre-pandemic level until the third quarter.
Last year, the country's GDP grew by 2.9%; in the final quarter of 2021, it shrank by 0.3% compared with the previous three-month period.
“The high dependence on Russian energy supplies entails a considerable risk of lower economic output and even a recession with significantly higher inflation rates,” the panel said.
The economists said in a statement that “Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies and quickly end its dependence on Russian energy sources.”
They added that “in the long term, the goal must be to ensure higher energy security, for example by expanding renewable energies and diversifying energy imports.” Those steps reflect the German government's policy.
Shortly before the economists released their forecast, Germany triggered an early warning level for natural gas supplies amid concerns that Russia could cut off deliveries unless it is paid in rubles.
The panel of advisers forecast growth of 3.6% in 2023.
In a separate report Wednesday, the Federal Statistical Office estimated that Germany’s year-on-year inflation rate leapt from 5.1% in February to 7.3% in March. It pointed to the effect of the war on gas and oil prices, as well as bottlenecks caused by delivery chain interruptions due to the pandemic.
An earlier version of this story was corrected to show that Germany's 2021 GDP was revised to 2.9% from 2.8%; and GDP shrank in the fourth quarter by 0.3%, not 0.7%.