The new forecasts from the Ministry of the Economy have confirmed the positive signals which have been multiplying since the end of the year, dispelling the specter of a twilight winter for the country.

Germany is expected to register growth of 0.2% in 2023, according to the government, while Berlin was still expecting a contraction of 0.4% in GDP this autumn against a backdrop of soaring energy prices for the industrial sector and a decline in purchasing power.

After growth of 1.9% in 2022, Germany is "holding firm", notes the Ministry of the Economy, whose report underlines the "resilience" of activity in the face of the energy crisis.

In particular, he praises the energy savings of individuals and businesses after Russia gradually cut off its gas deliveries last year.

"Thanks to these efforts, the economic outlook for 2023 is better than expected," the ministry added.

"We expect the economic situation to clear up from the spring," Elga Bartsch, head of economic policy at the ministry, told reporters.

Before that, Germany could experience two quarters of decline in growth, a technical recession "shorter and softer, if it occurs, than in our autumn forecasts", advanced alongside him the Minister of the Economy. Robert Habeck.

Nice surprise

Before the deputies of the Bundestag on Wednesday, Chancellor Olaf Scholz even affirmed that his government was in a position to "sound the end of the economic crisis".

"No one really expected that we would easily survive a situation where there would be a complete shutdown of Russian gas supplies to Germany," he admitted last week.

The energy crisis, caused by the war in Ukraine, has shaken up the German economic model, based in particular on the massive importation of inexpensive gas from Russia.

Inflation soared, as production costs in industry, the engine of German growth, fueling fears of a major economic crisis.

The German economy has so far warded off the darkest scenarios thanks to falling energy prices in recent months, taking advantage of a mild winter in Europe, and Berlin's efforts to increase its gas supply liquefied natural.

Berlin has also released a budget of more than 200 billion euros to support purchasing power and businesses, financing an energy price shield.

Thanks to the catch-up effect at the end of the Covid-19 pandemic, private consumption played the role of pillar of activity in 2022.

But it is now "shaken" by inflation, warned Ms. Bartsch.

So that the industrial sector and exports in particular, struggling last year, will again serve as the spearhead of the economy in 2023, according to the ministry.

Falling energy prices helped inflation come down from October's peak of 10.4% year on year.

The Ministry of the Economy expects this trend to continue: it expects inflation to fall to 6% this year, after an average of 7.9% in 2022, a record in post-war Germany. .


The crisis is not over yet.

“Not falling off the cliff is one thing, organizing a strong rebound is another,” analyzes Carsten Brzeski, economist at ING Bank.

On the one hand, German export-oriented economic activity should benefit from the lull in Chinese supply chains, blocked during the months of confinement, and lower inflation may revive German consumer demand. .

But industrial production remains 5% below its pre-pandemic level, Brzeski points out.

Uncertainty still weighs on energy reserves for the winter of 2023-2024 and industrial orders have been down for nearly a year.

The government, which recognizes that "uncertainties" still weigh, must continue to secure energy supplies, strengthen Germany's competitiveness and its "strategic sovereignty", indicates the report.

© 2023 AFP