Germany sees risk of an economic recession away

The Government tries on a growth of 0.2 % in 2023, far from the agitated alarmist scenarios after the outbreak of the war in Ukraine.

by Cécile Boutelet (Berlin, Correspondence )

Little by little, the sky emerges above the German economy. Even if the crisis is not yet entirely overcome, the perspectives are much less dark than what was still emerging in early fall. Now, even the risk of a long recession seems to be dismissed, says Berlin. Wednesday, January 25, the Minister of Economy and Climate and Vice-Chancellor, Robert Habeck, announced that the government is currently expecting a growth of 0.2 % for 2023. In the fall, it still expected A GDP contraction of 0.4 % for the current year.

“The country has managed to avoid a serious economic crisis. This is the message of the year 2022: we made the crisis controllable,” said Robert Habeck on Wednesday during the presentation of the annual economy report German, which traditionally draws up the balance sheet of the past year. The Minister recalled that the most alarmist scenarios envisaged a contraction of the activity of 12 % – a crisis more than twice as high than that caused by the epidemic of the COVID -19 – in the event of interruption of deliveries of Russian gas, as well as important bankruptcies of companies. None of this has happened.

Germany recorded growth of 1.9 % in 2022, while reducing its Russian gas consumption in a few months. And the contraction of the expected economy this winter could result in a only technical recession – two quarters in a row of negative GDP – which would be offset by a return of growth from spring. “We are rushing into the fact that the recession, if ever it occurs, will be shorter and less hard [than what we expected],” said Robert Habeck. Inflation is expected to descend to 6 % on average in 2023 (compared to 7.9 % in 2022), and return to 2.3 % in 2024, estimate the services of the ministry. The dreaded risk of a pricing-side spiral has also been avoided, in particular thanks to wage agreements very measured in the industry. Unemployment should only increase very slightly – to only 5.4 % (+ 0.1 % compared to 2022).

How to explain this almost unexpected resilience of the German economy? The Minister did not fail to highlight the measures taken by his government: the large aid packages granted to businesses and households; The terminals for liquefied natural gas, delivered in record time; the nationalization of energy companies in difficulty like Uniper; The brake system at the price of gas, or the decision to have the gas of gas buy on international markets by the State to complete the reservoirs left empty by Gazprom.

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/Media reports cited above.