Joint economic forecast 2-2022. Energy crisis: Inflation, recession, loss of prosperity

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 145th Joint Economic Forecast entitled "Energy Crisis: Inflation, Recession, Loss of Prosperity" contains a detailed short-term forecast up to the year 2024 as well as a medium-term projection of economic development up to the year 2027. The main topic deals with the economic consequences of a gas shortage in Germany. The crisis on the gas markets is having a severe impact on the German economy. Reduced gas supplies from Russia have eliminated a considerable part of the supply and also increased the risk that the remaining supply and storage volumes in winter will not be sufficient to meet demand. Gas prices have skyrocketed in the summer months, and the futures markets are also showing significantly higher quotations for a longer period of time. The resulting sharp rise in consumer prices is reducing the purchasing power of private households in particular. Economic output is likely to have already fallen slightly in the third quarter. A significant decline is expected in the winter half-year. The fact that this will not be even more pronounced is due to the high order backlog in the manufacturing sector. Overall, production is likely to expand by 1.4% this year despite the decline in the second half of the year. The institutes have thus almost halved their spring forecast for this year. For the coming year, gross domestic product is expected to decline by 0.4% on average for the year. In spring, the institutes still expected an increase of 3.1%. This revision shows the extent of the energy crisis. In 2024, the gross domestic product will expand by an annual average of 1.9%. The inflation rate is likely to increase further in the coming months. At 8.8%, the annual average inflation rate for 2023 is slightly above the current year's value (8.4%). Only in 2024 will the 2% mark be gradually reached again.