FRANKFURT: Germany’s output will contract 0.4 percent next year and inflation is expected to hit seven percent, the government forecast Wednesday, as Europe’s top economy battles soaring energy prices following Russia’s gas shutdown.
“We are currently experiencing a serious energy crisis, which threatens to become an economic and social crisis,” warned Economy Minister Robert Habeck, as he unveiled the official autumn economic forecasts. Germany, along with the rest of Europe, is facing skyrocketing prices — particularly of energy — after Moscow shut off crucial fossil fuel supplies as tensions soar over its war in Ukraine.
Its economy is still set to register growth of 1.4 percent in 2022, according to the government forecasts, after having enjoyed a post-pandemic rebound earlier in the year.
But it will shrink 0.4 percent in 2023, with the economy ministry saying the “central reason” for the downgrade from forecasts earlier this year was “the halt to Russian gas supplies”. High energy prices are acting as “a brake on industrial production — above all in energy-intensive sectors”.
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