Germany's growth estimate lowered, inflation forecast revised up

ANKARA

Germany's economic growth estimate was lowered and its inflation forecast was revised up for 2022, a Munich-based research institute said on Wednesday.

According to the Ifo Institute for Economic Research, economic growth expectation was lowered to 2.5%, from the previous estimate of 3.1% made in March, while the inflation estimate was revised up to 6.8%, from 5.1% earlier.

The institute expects the German economy to grow 3.7% in 2023, and forecasts inflation will ease to 3.3%.

Ifo said Russia's war on Ukraine, high inflation and continuing supply bottlenecks are slowing economic recovery in almost all sectors of the German economy.

"The German economy came through the two coronavirus waves in the past winter half-year well. After a slight decline of 0.3% in the final quarter of 2021, economic output was already up again in the first quarter of 2022 and was most recently still just under 1% below its pre-crisis level at the end of 2019," it said in a statement.

"Consumer spending is also showing early signs of the high inflation rates. The increase in consumer prices reached 7.9% in May. In addition to energy, food prices in particular have risen significantly in recent months. However, the prices of other goods and services also increased at well above average rates," it added.