Russia-Ukraine war slows economic recovery and drives prices up

The Central Bank of Germany (Bundesbank) stated that the Russia-Ukraine war slowed down the economic recovery in Germany and warned that inflation in the country would increase in the coming months.
The March report of the Bundesbank on the economy has been published.

The report stated that the Russia-Ukraine war temporarily slowed the recovery of the German economy and said, "The effects of Russia's attack on Ukraine are likely to have a noticeable effect on economic activities in Germany from March." it was said.

In the report, which pointed out that high energy prices due to the effect of the war reduced the consumption of households and the production of energy-intensive industry, "The inflation rate is likely to increase further in the coming months due to the war. This will especially be caused by energy prices." expression was used.

In the report, it was noted that the problems in the supply chains have worsened again with the war, and that the recovery of the German economy in the second quarter of the year will be much weaker than expected.

"Food and industrial goods prices are likely to show an additional increase"
"Food and industrial goods prices are likely to increase further as a result of the decline in wheat exports from Ukraine and Russia or new disruptions in supply chains," the Bundesbank report said. it was said.

Annual inflation in Germany, which was 4.9 percent in January, reached 5.1 percent in February, before the latest rise in oil and gas prices, which was fueled by Russia's attack on Ukraine.

Kiel Institute of World Economy (IfW), one of Germany's leading economic institutes, stated on March 17 that the sharp increase in raw material and production costs has not yet been fully reflected to consumers, and that high inflation rates will be seen in Germany throughout the year, with the additional costs being fully reflected on consumer prices. had drawn attention.

IfW economists expect inflation in Germany to rise to an average of 5.8 percent this year. If that happens, the country will see the highest level of inflation since East and West Germany reunited in 1990.