Germany's IfW economic institute said on Wednesday it did not expect a strong economic recovery in 2023 due to continued losses in consumer purchasing power as a result of stubbornly high inflation.
The Kiel-based researchers raised their growth forecast for 2023 from 0.3% to 0.5%. The German government is predicting growth of 0.2%. For 2024, the institute upgraded its growth forecast from 1.3% to 1.4%.
"The German economy is struggling to emerge from the energy crisis," the IfW said in its spring forecast. "The economic consequences of the war in Ukraine have stalled the recovery from the pandemic and noticeably depressed the level of gross domestic product."
According to the report, consumer prices are set to rise by 5.4% this year, and by 2.1% in 2024.
"High inflation is reducing households' disposable incomes and leading to a decline in private consumer spending in the current year," the IfW said. (Reporting by Rene Wagner, Writing by Friederike Heine; Editing by Paul Carrel)