German economy to avoid recession in 2023, set to grow 0.2%

Berlin: The German government expects its economy to grow by 0.2 per cent this year instead of the 0.4% contraction it predicted in October, , the economy ministry said in its latest projections.

Germany is all set to escape a recession this year, the government said Wednesday, as Europe’s biggest economy weathers the fallout from the Ukraine war better than expected.

Chancellor Olaf Scholz told Bloomberg last week in an interview that he was sure Germany would escape recession this year despite the energy crunch triggered by Russia’s invasion of Ukraine. Diversifying gas supplies had been critical in helping to keep the economy running, he said.

Back in October, when fears were running high about soaring energy costs in the wake of Russia’s war in Ukraine, Berlin was bracing for a contraction of 0.4 percent in 2023.

The more optimistic outlook comes as massive government intervention has helped keep the lid on energy costs for households and businesses after Russia cut deliveries of natural gas last year.

As well as criss-crossing the globe to find alternative suppliers, the German government has unveiled a 200-billion-euro ($212-billion) support package to cushion the energy crisis, including a cap on electricity and gas prices. Mild winter weather and falling wholesale gas prices recently have further bolstered confidence that the expected downturn won’t be as painful as initially thought.

“The German economy as a whole has proved resilient,” the ministry said in an annual report.

“Consumers have also done their part by making major energy savings.”

With inputs from agencies

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