According to Economics Minister Robert Habeck (Greens), Germany has overcome the economic downturn of the past nine months. “We are leaving the valley and then things will go up again,” said Habeck on Wednesday when presenting his new economic forecast in Berlin. As already reported, the federal government assumes that economic output will shrink by 0.4 percent this year. The Federal Republic would therefore be the only large industrial country that would have to cope with such a decline. In the spring, Habeck had expected an increase of the same magnitude.
For next year and the year after that, the minister expects a return to positive growth with growth rates of 1.3 and 1.5 percent. According to his ministry’s forecast, inflation could fall again to an annual average of 2.6 percent as early as 2024. In 2022 it was still 6.9 percent.
According to Habeck, the current problems of the German economy are primarily due to the Russian war of aggression against Ukraine. This drove up energy prices and overall inflation massively and forced the world’s major central banks to drastically raise key interest rates. As a result, companies’ consumption and investment activity was dampened and construction activity was literally stalled. However, the minister admitted that in addition to these factors, there were also “home-made” problems that were weighing on the economy. These included the high level of bureaucracy and the rampant shortage of skilled workers.
The minister confirmed that the government wants to extend the electricity and gas price brakes beyond the end of the year, presumably until April 2024. Electricity prices are already below the values at which the brakes actually take effect, said Habeck. In this respect, an extension does not cost anything. “But if something happens, we will be happy that we have the gas and electricity price brake,” he said.