Ifo cuts German growth forecast, cites Ukraine conflict

The Ifo Institute cut its German growth forecast on Wednesday and lifted its inflation forecast, citing the impact of the Russia-Ukraine conflict.

Ifo now expects economic growth of between 2.2% and 3.1% this year, down from a previous forecast of 3.7%. For next year, it expects GDP growth of 3.3% in its base case scenario and 3.9% in its alternative scenario. This is up from a forecast of 2.9% growth in December.

Ifo chief economist Timo Wollmershaeuser said: "The Russian attack is dampening the economy via significantly higher raw material prices, sanctions, increasing supply bottlenecks for raw materials and increased economic uncertainty."

The Ifo Institute also lifted its inflation forecast to between 5.1% and 6.1% for this year, from an estimate of 3.3% in December. In 2023, inflation is expected to be 2.0%, versus a previous forecast of 1.8%.