As Germany’s Spiegel weekly reports online, the Institute of the German Economy (IW) formulates a “gloomy” outlook in a survey simulating two scenarios. The IW, a “Brookings Institution”-style entity, assert in their report the following startling estimates, which bear both scrutiny and attention. If gas prices rise by 50%, the research team said, inflation is likely to increase by 0.9% on average this year, and by 1.3% next year. If gas prices double, which is currently a “realistic” scenario, inflation would grow by 1% point this year and by almost 4% points next year, it said.
In their study, the researchers simulated the consequences for the labor market and the economy if gas prices should rise by 50% in the third quarter, compared with the second quarter, as well as in the event that prices double. The study was based on taking into account the consequences of the Ukraine war, in particular the energy crisis. The IW team calculated that if gas prices double, some 30,000 people could lose their jobs this year, and in the coming year, another 307,000 people. If gas becomes scarce, enterprises that can’t afford higher prices for gas as their main source of energy, will reduce production, and, as a consequence, also reduce employment.
