The war in Ukraine has had a huge impact on German business. The German Association of Chambers of Commerce (DIHK) estimates the loss in gross domestic product (GDP) at 4 percent, which amounts to no less than 160 billion euros. Nevertheless, the German Bundesbank is optimistic about the future. ‘The estimate of the DIHK seems very high to me,’ says BNR’s house economist Han de Jong.
De Jong has his doubts about the DIHK’s estimate, given that the German economy experienced a small growth of two percent last year. “Are they saying that without the war it would have been six percent? That seems a bit exaggerated to me. Perhaps they mean to say that that is the damage that would have been partly cushioned. For example, by the government, which has provided purchasing power support. Then part of it is passed on to government finances.’
The bad news about last year is offset by a more optimistic message about next year. According to the German Bundesbank, an improved economic outlook is on the horizon, after the contraction of the last quarter of last year turned out to be better than expected.
De Jong points to a number of causes for the positive forecast. ‘In the meantime, energy prices are a lot lower than in August. That is very important, because Germany has many energy-intensive companies. In addition, it is positive that China is reopening, a country with which Germany trades relatively extensively. Finally, the German car industry has been improving somewhat in recent months, and the chip shortages have disappeared.’
Interest rate increase
Nevertheless, De Jong calls the news from the Bundesbank ‘spicy’, and points to the ‘considerable’ interest rate increase by the European Central Bank (ECB). ‘Apparently they don’t mention that. But actually we don’t yet know exactly how much influence the interest rate increase by the ECB, of which the Bundesbank is part, will have on the economy.’