Recession in 2023: Traffic light government lowers economic forecast - high inflation of seven percent expected for next year

Due to the energy price crisis, the federal government has significantly lowered its economic forecast.

Recession in 2023: Traffic light government lowers economic forecast - high inflation of seven percent expected for next year

Due to the energy price crisis, the federal government has significantly lowered its economic forecast. Economics Minister Robert Habeck (Greens) spoke on Wednesday in Berlin at the presentation of the autumn projection of "serious times". According to the forecast, the government expects only small economic growth of 1.4 percent this year, and the economy is likely to shrink by 0.4 percent in the coming year. Growth of 2.3 percent is expected for 2024.

In the spring projection, the federal government still expected an increase in gross domestic product of 2.2 percent this year and 2.5 percent next year.

"We are currently experiencing a severe energy crisis, which is increasingly developing into an economic and social crisis," said Habeck. The trigger for this crisis is the attack by Russian President Vladimir Putin on Ukraine. Russia stopped gas supplies. As a result, energy prices are still at a very high level, according to the ministry. High prices slowed down industrial production. The loss of purchasing power is also leaving its mark on price-adjusted private consumption, which is likely to decline next year.

The federal government had announced a protective shield of up to 200 billion euros to support consumers and companies because of the sharp rise in energy prices. The planned gas price brake is also to be financed from this. According to Habeck's forecast, this will dampen the increase in consumer prices in the coming year. The federal government expects an inflation rate of 8.0 percent in the current year and 7.0 percent in the coming year.

NEXT NEWS