(Updated with IfW forecasts, quotes)
BERLIN, June 15 (Reuters) – Germany’s economy is expected to grow weaker than expected this year due to the economic fallout from war in Ukraine, the Ifo economics institute said on Wednesday.
He now expects gross domestic product (GDP) growth of 2.5% over the whole year against a forecast in March of 3.1%. The institute also expects an inflation rate of 6.8% rather than 5.1%.
“At the beginning of the year, high prices led to a loss of purchasing power for households and, in turn, a drop in the consumption of goods,” said Ifo economist Timo Wollmershäuser.
“Economic growth is currently still 1% below the pre-pandemic level at the end of 2019, but we expect a gradual slowdown in the rise in commodity prices and an easing of bottlenecks during the second semester of this year,” he added.
The Ifo forecasts a growth rate of 3.7% in 2023.
In addition, the IfW institute raised its inflation forecast in Germany to 7.4% in 2022, against 5.8% previously, and to 4.2% in 2023, against 3.4%.
IfW, which is part of the panel of economic institutes advising the German government, nevertheless maintained its GDP growth estimate at 2.1% for this year. For 2023, on the other hand, it has slightly revised its forecast, to 3.3% against 3.5% previously. (Report Rene Wagner, written by Miranda Murray, French version Laetitia Volga, edited by Kate Entringer)