The horizon is not completely clear, but it is clearing up somewhat across the Rhine. Germany should escape a recession this year, according to the forecasts of the government, which considers that its economy is coping better than expected with the shock wave of the war in Ukraine.
According to the Ministry of Economy, GDP growth will be weak but positive at 0.2% in 2023. To last autumn, Berlin still anticipated a contraction of 0.4% of GDP due to soaring energy prices for the industrial sector and the fall in purchasing power.
More optimistic forecasts as winter passes
The prospect of a recession in Germany was almost a consensus among German economists. Many economic institutes and experts spoke of a drop in the wealth produced in 2023, before revising their figures upwards recently. German leaders have also spoken more optimistically in recent weeks, believing that the country has already overcome most of the difficulties for this winter.
Germany “held on”boasted the Ministry of Economy Robert Habeck, pointing out the ” resilience “ activity in the face of the energy crisis, to the credit of consumer energy savings following the loss of Russian gas.
« The slight improvement in the outlook is explained by the lower than expected increase in energy prices (…) due in particular to the intervention of the State “, justifies the IfW institute which nevertheless recalls that “the energy crisis weighs heavily on the German economy”. If it holds its pace of 0.2% in 2023, German growth will be historically weak at its lowest level since 2009, if we exclude the 2020 episode marked by the Covid.
The effect of the 200 billion euros on inflation
Last week, Chancellor Olaf Scholz said to himself ” convinced “ that the country would not enter a recession. “I don’t think anyone really expected that we would easily survive a situation where there would be a total stoppage of Russian gas supply to Germany”he said.
Berlin’s policy has been to unblock an unprecedented budget of around 200 billion euros at the end of 2022 to cushion the energy shock on households and businesses, particularly industrial ones. The colossal amount of the envelope provoked the ire of its European partners, worried regarding the competitive advantage offered to German companies. At the same time, Germany has started the construction of seven gas terminals, three of which are already operationalto import liquefied natural gas (LNG) by ship and compensate for the end of Russian gas imports.
The measures helped to calm inflation, which started to decline following peaking at 10.4% in October. The Ministry of Economy expects this trend to continue this year. According to its figures published on Wednesday, inflation should return to 6% this year, following having reached 7.9% on average in 2022, unheard of in post-war Germany.
(With AFP)
