The head of the German Institute for Economic Research (DIW) has said he expects Russia’s invasion of Ukraine to continue to hamper growth and inflate costs in the German economy.
DIW President Marcel Fratzscher said the war and its effect on driving up energy prices have already cost the German economy about €100 billion ($107 billion), or about 2.5% of gross domestic product (GDP).
“The German economy has been more affected by the crisis because it was more dependent on Russian energy, has a high proportion of the energy-intensive industry, and is extremely dependent on exports and global supply chains,” Fratzscher told the Rheinische Post newspaper.
There could be damage to Germany’s standing as a business location if companies do not speed up efforts to use less energy and embrace digital and economic transformations, he said.
Fratzscher added that higher energy prices would remain a clear competitive disadvantage for Germany over the next decades.
A crisis of commodities and supply chains
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He said policymakers and companies would have to compensate with more innovation and productivity, and that the German government should not increase subsidies for fossil fuels.
Business lobby group expects more losses
The Association of German Chambers of Commerce and Industry (DIHK), a prominent business lobby group, on Monday also highlighted the costs of Russia’s war to the German economy.
The group forecasts that the war and its impact would cost Germany about 4% of GDP between Russia launching its invasion in February 2022 and the end of 2023.
DIHK President Peter Adrian told the Rheinische Post newspaper, the economy will generate about €160 billion less — roughly €2,000 per German resident.
Meanwhile, Germany’s central bank predicted that the country’s economy will likely enter a technical recession.
A recession is generally identified by a fall in GDP in two successive quarters, and the German economy contracted in the fourth quarter of 2022.
“Economic output in the first quarter of 2023 is likely to be lower than in the previous quarter once again,” the Bundesbank wrote in its monthly report.
Looking ahead, the Bundesbank said German economic output was likely to decline slightly on average in 2023, but that it was expected to do a little better than the 0.5% fall in GDP predicted in December.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
