A recession in Germany this year seems more and more inevitable. The forecasts follow one another and confirm it: the leading European economic power should see its gross domestic product decline in 2023. Like others, the European Commission revised its forecasts downwards this Monday. The FRG is a red lantern compared to its neighbors. The country’s economic difficulties are compounded by structural problems.
2 mins
With our correspondent in Berlin, Pascal Thibaut
Hardly a day goes by without a new clue or a prognosis confirming the difficulties of the economic situation. Last week, three institutes revised their growth estimates downward, expecting a recession of 0.4 to 0.6% for this year
Until a few months ago, the government hoped to avoid such a scenario. But this Monday, September 11, it was the European Commission which came to confirm this recession also quantified at -0.4%. Brussels, like others before, was counting on symbolic growth in 2023.
German newspapers line up comparative graphs showing that the country is bottom of the European class. The highly exporting economy is suffering from the difficulties of other nations, starting with China. Production is falling as are investments.
Energy-intensive industries suffer from additional costs and a competitiveness problem. Some are calling for a long-term subsidy for the price of electricity for these important sectors such as chemicals with very high energy consumption. But the Liberal Party is against it and the chancellor, Olaf Scholz, has reservations.
Household consumption fell as higher inflation in Germany cut into wage increases and troop morale. And rising interest rates are hurting construction. The government has decided on several billion in relief for businesses, but the return of budgetary austerity limits the government’s room for maneuver.
Also listenTODAY THE ECONOMY – In decline, Germany must review its economic model