Average inflation will rise to 9.3% next year, after 8.1% in 2022, the IFO institute also indicated.
Germany’s gross domestic product (GDP) is expected to shrink by 0.3% in 2023 due to massive inflation and a lack of Russian gas, amid war in Ukraine, according to a study by the IFO institute. published on Monday. “We are sliding into a winter recession“, Estimates Timo Wollmershäuser, director of economic studies of this institute, one of the most influential in Germany, which thus lowers its previous forecast for June by 4 points.
The IFO expects a technical recession in the first quarter of 2023, with a fall of 0.4% in GDP, after a decline of 0.2% in the fourth quarter of 2022.decreases in Russian gas supply that occurred this summer” and “the resulting massive price increases“, he explains. Average inflation should therefore rise to 9.3% next year, after 8.1% in 2022, he added.
Read alsoGermany: demonstration for 8% wage increase in industry
Gazprom has drastically reduced its gas deliveries in recent months to Germany, through Nord Stream, before stopping them at the beginning of September, against the backdrop of a standoff between Moscow and the European Union over the war in Ukraine. Germany, which got 55% of its supplies from Russia before the war, had to get supplies elsewhere, at much higher prices.
11% inflation in the first quarter of 2023
These tensions have therefore caused the price of gas and electricity to explode in Europe, causing inflation to soar. And the movement should continue: “Energy suppliers will significantly adjust their electricity and gas prices (…) in particular at the beginning of 2023“, estimates the IFO.
The President of the German Central Bank Joachim Nagel also judged “possiblethat Germany is slipping into recession from the 3rd and 4th quarters of this year, and will also remain there until the beginning of next year, in an interview given on Sunday to German radio Deutschlandfunk.
Read alsoHas Germany really decided on a tax on superprofits?
The inflation rate will rise to around 11% during the first quarter of 2023, severely affecting household purchasing power, the IFO still predicts. The German government adopted in early September a third plan of measures to help the poorest, but this will not be able to compensate for the expected loss of purchasing power, according to the IFO.
“The fall in real wages, of around 3% this year as well as next, will be the largest since the introduction of national accounts in 1970“, anticipates Timo Wollmershäuser. The situation could, however,normalize» again in 2024 with «growth of 1.8% and inflation of 2.5%“, he concludes.
SEE ALSO – For Olaf Scholz, saving fossil fuels will make Germany safer