The German government's council of economic advisers on Wednesday cut the country’s gross domestic product (GDP) forecast by more than half for this year, in the face of the economic uncertainty due to Russia's invasion of Ukraine.

Key takeaways

“See German GDP growth of 3.6% in 2023.”

“Cut forecast for German GDP growth in 2022 to 1.8% from 4.6%.”

“Expect average inflation rate of 6.1% in 2022, 3.4% in 2023.”

"Before the outbreak of war, rising industrial production and a robust labor market pointed to an economic recovery.”

“The Russian war of aggression against Ukraine has now drastically worsened economic conditions.”

"Germany should immediately pull out all the stops to arm itself against a possible halt in Russian energy supplies and at the same time quickly end its dependence on these imports.”

Market reaction

EUR/USD is trading close to a fresh daily high of 1.1145, adding 0.49% on the day.