German economy expected to grow 0.2% in 2023

German economy expected to grow 0.2% in 2023

The German economy should resume growth in 2023, albeit by a slight 0.2%, estimates the European Commission today, revising the previous forecast of 0.6% contraction to a positive value.

In its winter economic forecasts — which present only figures for Gross Domestic Product (GDP) and inflation — the EU executive points out that the growth of Germany’s economy, albeit slight, is “mainly driven by lower energy prices and political support for households and businesses that have lowered growth prospects.

By 2024, Brussels expects GDP growth to recover to 1.3%.

The inflation rate, on the other hand, is expected to be 6.3% this year, down from 7.5% in the previous economic forecasts (autumn, released in November), and to fall to 2.4% in 2024.

This year, Brussels expects that the “pass-through of the high growth in wholesale energy prices will be mitigated by the caps on gas and electricity prices, although these will remain at historically high levels.

Still rising production costs are expected to keep inflation — as measured by the harmonized index of consumer prices — at a projected 6.3% in 2023, the European Commission says.

The decline in the inflation rate to 2.4% is based on an estimated continued slowdown in energy prices.

The country closes 2022 with economic growth of 1.8% and inflation of 8.7%.

The European Commission released today in Brussels its winter macroeconomic forecasts for the eurozone, the European Union and the 27 member states.