Berlin, Mar. 22, (dpa/GNA) – The German economy has averted a feared recession and the outlook is slightly better due to a more stable energy supply, a German expert advisory panel said on Wednesday.
Overall, however, the situation remains tense, warned the German Council of Economic Experts, an academic body that advises the government on economic policy issues.
Gross domestic product (GDP) should grow by 0.2% this year, following an earlier prediction that it would shrink by the same amount. For 2024, GDP is expected to grow by 1.3%.
“The loss of purchasing power due to inflation, worsening financing conditions and only slowly recovering foreign demand are preventing a stronger upswing this year and next,” said Monika Schnitzer, chairwoman of group.
A noticeable easing in consumer prices is not expected until next year because rising wages and high producer prices will keep inflation from falling for now, panel member Martin Werding said.
“Inflation is increasingly reaching across the whole economy,” Werding said.
In the current year, the economic experts expect an inflation rate of 6.6%. Next year it will then fall to 3.0%, it predicted.
In autumn, the experts warned of considerable downward risks, mainly because of the impending gas shortage. At that time they predicted a recession, taken to mean two consecutive quarters of negative GDP growth.
However, the situation on the energy markets has eased since then. The EU Commission had also recently raised its expectations for the German economy and, like the German government, is assuming minimal growth.
In the updated forecast, the panel warned, also with an eye toward the winter of 2024, that there were “considerable risks” to the energy supply.
“In order to fully replenish gas storage and prevent gas shortages in the coming winter, we must continue to save energy extensively,” said expert Veronika Grimm. This applies even if Germany increases its imports.
GNA