Energy prices dampen Germany’s sluggish recovery

The German economy is gradually gaining momentum but upward forces remain subdued and are temporarily dampened by the most recent spike in energy prices, the Kiel Institute for the World Economy (IfW Kiel) said on Thursday.

According to the institute’s spring forecast, the country has left a three-year recession behind and is drifting into a moderate recovery, with expansionary fiscal policy providing the main impetus.

The GDP is expected to grow by 0.8% this year and by 1.4% next year while inflation is rising to 2.5% this year as a result of higher energy prices.

“The military conflict in Iran is threatening to create headwinds for the German economy,” says Moritz Schularick, president of the institute, adding that it remains to be hoped that the spikes in oil and LNG prices will last for a short period only.

• Economy
• Germany
• World Economy (IfW Kiel)