At a news conference last week where he presented the most recent predictions, Economy Minister Robert Habeck stated that the German economy is expected to decrease for two straight quarters.
The projection for the nation’s gross domestic product (GDP) in 2023 was changed in the report to 0.2% growth this year. The administration had predicted a 0.4% reduction in GDP for this year back in the fall. The recent decline in energy costs has also improved the prospects for inflation. The previous prediction of 7% price rise for the year has been revised down to 6%.
Habeck stated that although the nation’s economy would avoid a dramatic downturn, a technical recession is still likely to occur and that the crisis is far from finished.
“The message is that the crisis is now controllable,” The crisis has not ended as a result. The worst-case circumstances, however, could not be avoided, he said.
Two quarters of negative growth constitute a technical recession. However, according to Habeck, the third and fourth quarters of this year could see an improvement.
Germany, the biggest economy in Europe, experienced record inflation last year as a result of an increase in energy costs brought on by a decrease in Russian energy supply as a result of sanctions related to the Ukraine. Due to increased efforts to diversify energy sources, an unusually mild winter, and the filling of gas storage tanks, prices have mostly stabilized. Forecasts for the German economy in 2023 became more optimistic as a result, while they were still conservative. However, many analysts continue to note that Berlin may experience issues in the summer when it must restock its gas reserves for the upcoming winter with few or no Russian supplies available.
