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The German economy will grow this year much weaker than expected, announced the International Monetary Fund (IMF).
The German economy is facing challenges this year and next year, said IMF expert for Germany Oya Celasun, mainly due to gas supply restrictions.
The IMF now expects Europe’s largest economy to grow by 1.2 percent this year, down 0.8 percentage points from its previous forecast.
In the coming year, activity will slow even more, with an estimated growth rate of just 0.8 percent, the IMF found, which is 1.2 percentage points weaker than previously expected.
Inflation will reach 7.7 percent this year and slow to 4.8 percent in 2023, provided energy prices stabilize, IMF calculations showed.
Celasun warned of a high degree of uncertainty in the estimates, adding that the biggest threat to the economy would be a permanent and complete suspension of Russian gas exports to Germany and Europe.
The IMF expert called on Germany to be flexible in its financial policy so that it can react if the situation worsens. Flexibility may also include the repeated suspension of the constitutional borrowing provision.
The IMF gave a more positive assessment of the measures taken by the German government to secure energy supplies, including the import of liquefied natural gas and gas storage.
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