(ANSA-AFP) - BELGRADE, MAR 17 - Inflation in Germany could
rise above the 2.0 percent mark for the first time this year
since 2012 on rising energy prices even though an economic
recovery will be weaker than earlier expected, government
economic advisors said Wednesday. Prices could rise by up to 2.1
percent in 2021 and 1.9 percent in 2022, the so-called "Wise
Men" panel of economists which advises the government said in a
report. The rise in 2021 would see Europe's biggest economy
surpass the European Central Bank inflation target of just under
2.0 percent. After having slowed considerably in 2020, inflation
is expected to rise this year as the economy picks up following
the relaxation of measures to slow the spread of the Covid-19
pandemic. In Germany, prices sank by 0.5 percent in 2020 before
being pulled up this year by rising energy prices since the
introduction of a carbon tax in January. Preliminary official
data showed inflation reached 1.3 percent year-on-year in
February, its steepest rise since March 2020, when borders were
first slammed shut across the world as countries battled to halt
the coronavirus. Germany is traditionally wary of inflation for
historical reasons. Extreme hyper-inflation in the early 1920s
devastated the economy and fuelled political instability in the
fledgling Weimar Republic which preceded Nazi rule. In a country
which has remained nervous about currency stability ever since,
rising prices have fuelled criticism of the ECB and its ultra
expansionary stance. A member of a German government advisory
panel, Volker Wieland, last week called on the ECB to look at
raising interest rates in case of surging inflation. Yet ECB
president Christine Lagarde insisted last week that rising
inflation was due to "temporary factors" linked to the pandemic
and higher energy prices. In their report on Wednesday, the
"Wise Men" also lowered their growth predictions as a result of
ongong coronavirus restrictions. The experts said that German
output would rise by only 3.1 percent, rather than the 3.7
percent growth they predicted in November. The new figure
corresponds to the government's own predictions of 3.0 percent
GDP growth this year, following a 5.0 percent fall in GDP in
2020. In 2022, the experts predicted a growth of 4.0 percent,
with a return to pre-pandemic levels by the end of 2021 and the
beginning of 2022. (ANSA-AFP).
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