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Germany faces sharp drop in real income

Europe’s biggest economy is taking its worst hit since the 1979-81 oil crisis, according to a study

The German economy is expected to lose billions of euros by the end of 2023 due to skyrocketing energy prices, the Ifo Center for Macroeconomics said in a report published on Tuesday.

According to the forecast, real income loss will reach €110 billion ($110 billion) during the 2021-2023 period, which equals 3% of Germany’s annual economic output.

“The only time this figure was higher was during the second oil crisis of 1979-81, when the loss in economic output was 4%,” said Timo Wollmershaeuser, senior economist at Ifo.

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The surge in energy prices is expected to take a heavy toll on the German economy this year, with an anticipated €64 billion loss, or 1.8% of the country’s output. The estimated loss for 2021 exceeded €35 billion, and a €9 billion drop is expected for 2023, according to Ifo.

German citizens will continue to feel the impact of the energy crisis over the next few years with a drop in real incomes, Wollmershaeuser warned, adding that losing Russia as the main energy supplier will result in long-term high oil and gas prices.


READ MORE: EU and UK energy bills smash record high – Bloomberg

He also predicted that Germany will not wean itself off energy imports “overnight” as the country has long been dependent on external supplies.

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In late October, Ifo predicted that the German economy would contract by 0.6% in the fourth quarter. According to an Economy Ministry forecast, Germany will see growth of 1.4% this year and a 0.4% slump next year.

For more stories on economy & finance visit RT’s business section

https://ift.tt/K9T5SIw 08, 2022 at 10:30PM
from RT – Daily news

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