– by Holger Hansen
Berlin (Reuters) – The German government believes that the high energy prices as a result of the Ukraine war are driving Germany into a recession.
In the autumn projection of key economic data, the federal government is assuming a decline in price-adjusted gross domestic product (GDP) of 0.4 percent for 2023, according to preliminary figures, the Reuters news agency learned on Thursday from two people familiar with the government’s internal calculations. For the current year, growth expectations are expected to be reduced to 1.4 percent. Federal Minister of Economics Robert Habeck (Greens) will present the autumn projection next Wednesday. A spokeswoman for his ministry said on request: “There are no final figures yet. The final work is ongoing.”
In April, the government still expected GDP to increase by 2.2 percent in 2022 and 2.5 percent next year. According to insiders, the autumn projection for 2024 assumes growth of 2.3 percent at the current level. According to the insider, the federal government expects high inflation to continue. For the current year, a price increase of 7.9 percent on average is assumed. According to the current status of internal government consultations, 8.0 percent is expected for 2023. This could change slightly as a result of the planned gas price brake.
According to the insider, the economic effects of the 200 billion euro defense plan planned by the federal government against high energy costs and inflation have not yet been taken into account in the projection. This is too short-term, especially since the gas price brake is still open in detail. The gas commission set up by the government is to hold a closed meeting at the weekend to draw up proposals for a gas price brake that would curb the rise in energy prices for consumers through state subsidies.
With the economic assessment, the government is moving within the expectations of the leading research institutes. Last week, they predicted the same figures for GDP development in 2022 and 2023. When it came to inflation, the institutes were even more pessimistic at 8.4 percent this year and 8.8 percent next year.
(Report by Holger Hansen, edited by Hans Seidenstücker; if you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).)