BERLIN (Reuters) – Germany’s leading economic institutes have slashed their 2022 growth forecast for Europe’s biggest economy due to the impact of the war in Ukraine, they confirmed on Wednesday, adding that a Russian energy supply freeze would cause a recession in 2023.
Confirming revised forecasts reported by Reuters on Tuesday, the five institutes cut their 2022 growth forecast for Europe’s biggest economy to 2.7% from 4.8% in a baseline scenario, and forecast 2023 growth of 3.1%.
The institutes – the RWI in Essen, the DIW in Berlin, the Ifo in Munich, the IfW in Kiel and Halle’s IWH – also issued forecasts for an adverse scenario of a sudden supply stop of Russian energy, in which the economy would grow by 1.9% this year and contract by 2.2% in 2023.
“If gas supplies were to be cut off, the German economy would undergo a sharp recession,” said Stefan Kooths, vice president and research director business cycles and growth at the Kiel Institute for the World Economy.
The cumulative loss of GDP in 2022 and 2023 in the event of a supply freeze is likely to be around 220 billion euros ($238 billion), equivalent to more than 6.5% of annual economic output, the institutes said.
($1 = 0.9228 euros)
(Writing by Paul Carrel; Editing by Maria Sheahan)
