China News Agency, Berlin, April 19 (Reporter Ma Xiuxiu) According to the forecast of the German Institute for Economic Research (DIW), Germans must prepare for continued high prices.
Marcel Fratzscher, president of the institute, told German media on the 19th that prices will rise further "in the next five to ten years".
The above judgment is based on the background of the Russian-Ukrainian conflict, huge uncertainty, and the end of previous forms of globalization.
At present, high prices are largely driven by "speculation," Fritzcher said on the same day.
Some of the supply will not be released for the time being due to concerns about possible shortages in the future.
This fear of the future is driving prices higher.
In his view, uncertainty about "what might happen" is perhaps the biggest poison.
Fletcher expects the situation to calm down only when the Russian-Ukrainian conflict ends.
While Russia is a relatively unimportant economy from a global perspective, Germany in particular is highly dependent on the country, "which binds us".
As long as the conflict persists, “we will feel the shackles economically.”
Fritzcher also pointed out that in the context of the Russian-Ukrainian conflict and the resulting supply chain disruption, it is necessary to rethink globalization.
"Currently our globalization is completely blind, with which country to trade with, people only focus on cost and efficiency." Globalization must now be shaped to be more sensible and resistant.
To distribute production to more areas internationally, "maybe also produce more products here in Europe itself".
In addition, Fritzcher hopes the government will provide more targeted burden reduction measures, suggesting that the value-added tax rate should be reduced from 7% to zero.
Fletcher also called on the state to invest more in energy transition, digitalisation and education.
He also pointed out that raising wages and raising the minimum wage are the best measures to help people quickly and easily.
This has to be done to a certain extent, but the adjustment is absolutely necessary to maintain consumption in the context of high inflation.
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