German economic institute IfW revised upwards its forecast for German GDP for 2023, but warned that a strong economic recovery should not be expected this year amid deteriorating consumer purchasing power and high inflation.
IfW expects German GDP to grow by 0.5% in 2023 (previous forecast: +0.3%), and next year economic growth will accelerate to 1.4% (previous forecast: +1.3%). Meanwhile, according to the latest forecasts of the European Commission, Europe's largest economy will grow by 0.2% in 2023. Growth is expected to rebound to 1.3% in 2024, according to the Commission's forecasts.
"The economic consequences of the war in Ukraine and the energy crisis have slowed down the recovery of the German economy after the pandemic and significantly reduced the level of GDP," the IfW said, adding that they expect the CPI to grow by 5.4% in 2023 and by 2.1% next year.
Meanwhile, the forecasts of the European Commission suggest consumer inflation at 6.3% this year and its decline to 2.4% in 2024.