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German Economic Outlook Less Gloomy Than Thought

Despite ongoing challenges like the war in Ukraine and the sanctions against Russia, the German government has adjusted its economic forecast upwards and predicts that inflation has passed its peak.

According to the spring economic forecast presented on Wednesday, Berlin expects a 0.4% economic growth – slightly more than 0.2%, predicted at the start of this year.

In February, the German central bank predicted a recession in the country.

“There is encouraging news again: After the COVID-19 crisis, the German economy is proving adaptable and resilient in the energy crisis as well,” Green Economy Minister Robert Habeck said in a statement.

For Habeck, this shows that the economic support measures taken by the government had the intended effect. “With these, we gave companies and private households a helping hand in a difficult time and brought down the high energy prices,” he said.

The government also expects inflation to fall after soaring to record highs since Russia’s war in Ukraine started. After a rate of 6.9% last year, the federal government projects 5.9% this year and 2.7% next year.

However, this also means that consumers will continue to face high living costs during the coming months while the situation will only ease towards the end of the year, according to the forecast.

The government estimates that this should also lead to private consumption growing again.

Source : Euractiv