Germany will have to forfeit an economic upswing in spring as Russia's invasion of Ukraine, sanctions and high energy prices hurt companies and households, Economy Minister Robert Habeck said on Thursday, pledging state support to keep firms afloat.
"The consequences of the sanctions and war are noticeable and the situation remains tense," Habeck said after talks with German business leaders, adding that hopes of a return to pre-pandemic levels of growth in the second quarter had been dashed.
"We had hoped that we would experience an upswing this spring, a recovery phase. But now we have the consequences of the war," he said, adding that state bank KfW would extend loans to German businesses affected by sanctions on Russia.
Habeck did not say how much liquidity KfW would provide.
Russia's invasion of Ukraine entered its second week on Thursday with Ukrainian cities surrounded and under bombardment.
Habeck said he hoped measures taken by the German government to alleviate the impact of sweeping economic sanctions on Russia and high global energy prices on businesses and households would avert a recession in Europe's largest economy.
Habeck said he was opposed to calls by Germany's partners to ban Russian energy imports, saying that Russian gas and oil were needed at least in the short-term as Germany works on diversifying supplies to make itself less dependent on Russia.
"We will keep open the possibility of energy imports from Russia" to ensure that electricity prices remain relatively stable, he added.
The crisis in Ukraine has forced Germany to announce a national gas reserve, plans for LNG terminals as well as possibly extending the lifespan of coal-fired plants as it seeks to reduce its heavy reliance on Russian energy.
