Germany is expected to narrowly escape a recession this year, the government said on Wednesday, with Europe’s largest economy weathering the fallout from the war in Ukraine better than expected.
According to the latest forecasts from the Ministry of the Economy, Germany should record growth of 0.2% in 2023, according to a press release from the Ministry of the Economy.
Last autumn, Berlin expected a contraction in GDP of 0.4% against a background of rising energy prices for the industrial sector and falling purchasing power.
Many economic institutes and experts had also expected a drop in wealth to occur in 2023, before revising their forecasts upward in recent weeks.
Germany “has remained firm”, says the Ministry of Economy, underlining the “resilience” of the activity in the face of the energy crisis.
“Germany stood firm”
In particular, he praises consumers’ energy-saving efforts after Russia phased out its gas deliveries last year.
Last week, Foreign Minister Olaf Scholz said he was “convinced” that the country would not go into recession.
“I don’t think anyone really expected that we would easily survive a situation where there would be a complete shutdown of Russian gas supplies to Germany,” he said.
Energy prices have fallen in recent months, thanks to a mild winter in Europe and efforts by Berlin to increase its supply of liquefied natural gas.
Germany has also published a budget of more than 200 billion euros to support the economy, financing an energy price shield. Private consumption thus became the main pillar of activity at the end of the year, while the industrial sector and exports were struggling.
Lower energy prices have helped bring inflation down, after peaking at 10.4% in October.
The Ministry of Economy expects this trend to continue this year. According to the report published this Wednesday, inflation is expected to fall again to 6% this year, after having averaged 7.9% in 2022, an all-time high in post-war Germany.
However, the government must continue to secure energy supplies, strengthening Germany’s competitiveness and “strategic sovereignty”, the report says.
Source: BFM TV
