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IMF sees tepid German recovery but risks skewed to the downside

© Reuters. FILE PHOTO: General view of the “Grosse Bergstrasse” street during a lockdown in Hamburg, Germany May 11, 2021. REUTERS/Fabian Bimmer

BERLIN (Reuters) – The German economy, Europe’s largest, is on track for a tepid economic recovery but risks are tilted to the downside and fiscal policy should be flexible in an uncertain environment, the International Monetary Fund said on Monday.

In a statement after a mission to Germany, the IMF said it projected growth to slow to about 2% in 2022, picking up in 2023 to slightly above 2% if energy prices and supply bottlenecks subside, and COVID-19 infections remain under control.

“Growth would then decline toward potential after 2024,” the IMF said in its so-called Article IV report.

“Output would remain below the pre-pandemic trend in the medium term, given headwinds from elevated energy prices to private investment, weaker external demand, and greater economic and geopolitical uncertainty following the war,” it added.

IMF sees tepid German recovery ‘but risks are skewed downward’

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