The German government cuts its economic forecast and forecasts growth of 2.2%

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The German government expects the country’s economy, Europe’s largest, to grow just 2.2% this year, with Russia’s war in Ukraine weighing on the outlook.

BERLIN — The German government forecast on Wednesday that the country’s economy, Europe’s largest, will grow just 2.2% this year, with Russia’s war in Ukraine weighing on the outlook.

The economy ministry cut the outlook for gross domestic product to the 3.6% growth it forecast in January. It only sees slightly faster growth of 2.5% in 2023.

The government’s revised outlook was gloomier than a recent assessment by leading economic think tanks that expected the economy to grow 2.7% this year.

But the government’s outlook was more optimistic than the 1.8% growth forecast by its own panel of independent economic advisers. Last year, Germany’s GDP grew by 2.9%.

Economy Minister Robert Habeck said the government was making a “conservative” estimate, pointing to still fragile supply chains, the effect of sanctions against Russia on the availability of raw materials and the continued effects of the coronavirus pandemic.

The 2.2% growth forecast assumes no energy embargo or gas supply blockade, Habeck said. “If that came on top of that, we would have a recession in Germany,” he said.

Russian imports account for a large, albeit declining, share of Germany’s gas supplies. Habeck said that proportion had gone from 55% before the war to 35% now.

Chancellor Olaf Scholz’s cabinet on Wednesday approved a package of measures designed to ease the pressure on consumers from rising energy prices. It includes lower gasoline tax, cheap public transport tickets and one-time payments of several hundred euros to each taxpayer.

The cost to the public purse has been estimated at “much more” than 30 billion euros ($32 billion), government spokesman Steffen Hebestreit told reporters.

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