Depending on Russian energy, Germany may "drop" the position of the world's 4th largest economy to India

Germany could lose its position as the world's fourth-largest economy in nominal dollar terms to India by 2027, according to a new report by the Centre for Economics and Business Research (CEBR).

Germany has faced more supply-side headwinds in recent years. Illustrative photo. (Source: Euractiv)

Germany's drop to fifth place is due to its reliance on Russian energy to fuel production, CEBR research said.

“Germany has faced increasing supply-side headwinds in recent years, particularly from rising global energy prices in 2022. Germany’s dependence on Russian energy supplies has exacerbated this problem,” CEBR wrote.

The report said that the energy price shock has helped push up inflation in the European Union’s (EU) largest economy. Prices are expected to rise by 6.3% in 2023, down from the 8.7% increase recorded in 2022 but still higher than the recent average.

“High inflation has contributed to weakening spending power and constraining consumption, which has significantly affected consumer-oriented services. Germany’s gross domestic product (GDP) is expected to shrink by 0.4% in 2023 – the country’s weakest growth since 2009,” the report said.

In addition, global GDP will more than double to $219 trillion by 2038, due to “continued expansion in previously underdeveloped economies as they catch up and overtake rich countries,” CEBR said.

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