The war in Ukraine is driving up energy prices and exacerbating supply shortages. German industry fears major economic consequences.
The German export motor threatens to stutter, companies could put investments on hold and consumers could curb their consumption: German industry fears serious economic consequences because of the Ukraine war.
“For Germany, the economic outlook looks very bleak,” said the President of the Federation of German Industries (BDI), Siegfried Russwurm, the German Press Agency. “The relaxation of the corona virus is not giving the economy the hoped-for growth bonus this spring,” said Russwurm.
Due to the great uncertainty and new delivery bottlenecks that are hampering production, the BDI has not published a current economic forecast. Economic research institutes had recently lowered their forecasts significantly. If the conflict intensifies and Russian energy imports are stopped, Europe’s largest economy could face an economic downturn, according to economic experts.
According to the BDI, it is foreseeable that the consequences of the war will slow global economic growth and the economic recovery in the euro area. The German export motor is likely to stutter due to global growth losses and sanctions. Investments by German companies in machines and other equipment are likely to stagnate in 2022.
“In view of the lack of historical experience, it is unclear whether and to what extent the uncertainty will also affect the purchasing decisions of private households,” says the current BDI quarterly report. However, the sharp rise in energy prices, which are fueling inflation overall, caused a considerable loss of purchasing power. According to the BDI, private consumer spending will increase only slightly this year. Higher inflation weakens the purchasing power of consumers because they can then buy less for one euro than before.
Russwurm demanded: “The traffic light coalition must now preserve the economic strength of Germany and its companies and work on quickly effective, targeted and temporary measures to cushion the crisis.” For example, the federal government should provide temporary support for companies “that have gotten into economic difficulties through no fault of their own because of energy prices.” According to the Economics Ministry, the federal government is currently working “at full speed” on an aid package for companies affected by the consequences of the Ukraine war. (dpa)