Joint economic forecast 1-2022. From pandemic to energy crisis - economy and politics in permanent stress

The Joint Economic Forecast Project Group hereby presents its analysis of the development of the global economy and the German economy, which it prepared on behalf of the Federal Ministry of Economics and Climate Protection. The 144th report, entitled "From Pandemic to Energy Crisis - Economy and Politics in Permanent Stress", contains a detailed short-term forecast up to the year 2023 as well as a medium-term projection of economic development up to the year 2026. The main topic deals with the question of how decarbonisation will affect production potential. The German economy is steering through difficult waters. The buoyancy provided by the abolition of pandemic restrictions, the aftermath of the Corona crisis and the shock waves caused by the war in Ukraine are creating opposing economic currents. What all these influences have in common is their price-driving effect. In the past winter half-year, measures to protect against infection in particular dampened economic performance. Provided that the war in Ukraine does not escalate economic activity any further, the economic upward forces will gain the upper hand from spring onwards. After a weak start to the year, GDP is likely to increase significantly in the second quarter, but without the burden of the war in Ukraine the increase would be stronger. Overall, however, the recovery process will be delayed once again. Accordingly, the pre-crisis level of economic output will not be reached until the third quarter of the current year. All in all, the institutes expect an increase in GDP of 2.7% for this year and 3.1% for next year. In the coming year, the German economy will drift into a slight overutilisation of capacity. This is mainly due to the high order backlog in industry and catch-up consumer activity. In the event of an immediate embargo on oil and gas deliveries from Russia to the European Union, on the other hand, the German economy would fall into a sharp recession. In this case, the cumulative loss of overall economic output would probably already amount to around 220 billion euros in the two years 2022 and 2023, which corresponds to more than 6.5% of annual economic output.