Germany should not go into recession

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The committee announced on Wednesday in its updated economic forecast that the outlook is slightly brighter, mainly due to the more stable energy supply. However, the situation in general remains tense.

According to economists, the gross domestic product for the current year should increase by 0.2 percent. Previously, they had assumed it would shrink by the same amount. They expect 1.3 percent growth for the next year.

“Inflation-related loss of purchasing power, weaker financing conditions and slow recovery in external demand are preventing a stronger rise this year and next year,” said Monika Schnitzer, chair of the Advisory Council.

According to the assessment of the Board, a noticeable relaxation in consumer prices is not expected until next year. This is because, as committee member Martin Werding noted, rising wages and higher producer prices are likely to support inflation for now.

“Inflation is affecting the economy more and more,” Werding says. Economists expect an inflation rate of 6.6 percent in the current year. It will drop to 3.0 percent next year.

Experts had warned of significant downside risks in the fall, primarily due to impending gas shortages. In their annual report, they therefore predicted a recession for the German economy. However, the situation in the energy markets has since eased. The EU Commission has recently raised its expectations for the German economy and, like the federal government, assumes minimal growth.

In the updated forecast, the committee warned of “significant risks” in the energy supply, taking into account the coming winter. “We have to continue to save a lot of energy to fully refill the gas storage tanks and avoid gas shortages next winter,” said expert Veronika Grimm. This is true even if Germany expands its imports.

(SDA)

Source :Blick