The war in Ukraine had a huge impact on German affairs. The German Association of Chambers of Commerce (DIHK) estimates the loss of gross domestic product (GDP) at 4%, which amounts to no less than 160 billion euros. However, the German Bundesbank is optimistic about the future. “The DIHK estimate seems very high to me,” says BNR in-house economist Han de Jong.
De Jong has his doubts about the DIHK estimate, given that the German economy recorded a small two percent growth last year. “Are they saying that without the war it would have been six percent? Seems a bit exaggerated to me. Perhaps they mean that that is the damage that would have been somewhat mitigated. For example, by the government, which has provided purchasing power support. Then a part of it is transferred to government finances.’
Optimism
Bad news about last year is offset by a more optimistic message about next year. According to the German Bundesbank, an improvement in economic prospects is expected, after the contraction in the last quarter of last year turned out to be better than expected.
De Jong points to a number of causes for the positive forecast. ‘Meanwhile, energy prices are much lower than in August. This is very important, because Germany has many energy-intensive companies. It’s also good that China is reopening, a country with which Germany trades relatively extensively. Finally, the German car industry has improved slightly in recent months and the chip shortage has disappeared.’
Interest rate increase
However, De Jong calls the news from the Bundesbank “spicy” and points to the “significant” increase in interest rates by the European Central Bank (ECB). “Apparently they don’t talk about it. But in reality we still don’t know exactly how much influence the increase in interest rates by the ECB, of which the Bundesbank is a part, will have on the economy.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
