2023-10-14 02:55:24
The German government downgraded its economic growth projections for 2023 and beyond in its revised autumn forecast released on Wednesday (October 11), highlighting a slower recovery following the country officially entered recession earlier this year. EURACTIV reported.
While Berlin’s spring projections predicted slight growth of 0.4%, the government now forecasts that the German economy will contract by the same amount – a revision of 0.8 points. At the same time, Germany also updated its forecast for 2024, anticipating growth of just 1.3% instead of the previously forecast 1.6%, and just 1.5% in 2025.
Robert Habeck, Minister of the Economy of the German Green Party, had previously accused all those who questioned the official figures of “bad tongues”. However, the downward revision of the government’s economic forecast is now expected, as several independent forecasters have presented similar figures for Germany in recent days.
On Tuesday, October 10, the International Monetary Fund (IMF) predicted a 0.5% decline in Germany’s economic growth, while a group of leading economic think tanks in the country predicted a contraction of 0.6% last month.
“We are recovering from the crisis more slowly than expected in a difficult geopolitical situation,” commented Mr Habeck on Wednesday, before blaming Mr Putin and the ECB : What we are experiencing in 2023 is still linked to Vladimir Putin’s attack: high energy prices due to the absence of Russian gas have disrupted global market relations and high inflation, to which the ECB tackles with high interest rates.
On a positive note, Berlin expects inflation to be gradually reduced from an average of 6.1% this year to 2.6% in 2024 and 2% in 2025. The economic situation is also widening a gap between the German government’s coalition partners, all of whom saw their popularity crumble in recent regional elections and are now scrambling to come up with solutions.
While Mr Habeck and the Greens say the government is resolving the crisis “at unprecedented speed”, Finance Minister Christian Lindner, leader of the liberal FDP party, the smallest member of the coalition, recently warned that the Current measures were insufficient to “find new sources of wealth”.
As a short-term solution, the Greens still advocate a multibillion-euro electricity subsidy program to support Germany’s most energy-intensive companies. However, half of Chancellor Scholz’s Social Democrats (SPD) are reluctant to agree for fear of reducing innovation incentives for businesses and putting Berlin on a direct collision course with Brussels, which opposes any unfair distortion of the EU internal market.
Regardless, the grants are still on the table, with a 50/50 chance of being approved, Mr. Habeck said Wednesday.
Photo credit: DR
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