BERLIN (Reuters) – Germany’s IfW became the latest economic institute to revise up its growth forecast for 2023 on Thursday as Europe’s largest economy hopes to avoid the worst of the energy crisis with the help of easing energy market prices and state aid.
The Kiel-based institute now expects gross domestic product to increase by 0.3% in 2023, up from the institute’s autumn forecast of a 0.7% drop.
On Wednesday, the Ifo institute also revised up its 2023 forecast: It still predicts a decline next year of 0.1% but this is less severe than the 0.3% contraction previously forecast.
The IfW expects growth of 1.3% growth in 2024 compared to the Ifo’s 1.6% forecast for that year.
“The outlook for the economy has brightened somewhat – amid high uncertainty,” the IfW said in a statement.
The institute put the improved outlook down to falling gas and electricity prices in recent months as well as incoming government aid measures designed to limit energy bills for households and industry.
The IfW said it expects inflation to hit 5.4% in 2023, down from its previous 8.7% forecast. Inflation in 2022 should hit 8.0%, it added.
On Thursday, the RWI institute said it also expects inflation to ease next year, falling to 5.8% in 2023 after reaching 7.9% this year.
(Writing by Rachel More; Editing by Paul Carrel)