It could have been worse, according to the Federal Minister of Economics, according to the first information about his new annual economic report.
(Photo: Reuters)
Berlin Federal Minister of Economics Robert Habeck expects a better development in the coming year than was feared until recently. Should there be a recession, it will tend to be weaker, according to the draft of the annual economic report for 2023, as announced on Friday by people close to his ministry.
The government’s relief packages and the multi-billion dollar “defense umbrella” and the associated gas and electricity price brakes would play a major role in this. Despite the loss of Russian energy supplies, security of supply with gas and electricity is still high.
In mid-October, the federal government lowered its economic forecast significantly, primarily because of the energy price crisis. The government expects only small economic growth of 1.4 percent this year, and the economy is likely to shrink by 0.4 percent in the coming year. If the gross domestic product falls two quarters in a row, this is referred to as a so-called technical recession.
Report focuses on energy security and purchasing power
The government is now coordinating the details of the new report, which is to be published in 2023. How high exactly the forecast for economic growth and inflation will be was not known on Friday. However, more details about the planned energy policy and how to deal with the shortage of skilled workers leaked out.
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In view of the energy shortage, the green-led Ministry of Economic Affairs considers it more necessary than ever to make the supply more sustainable and climate-friendly. The accelerated expansion of renewable energies is central to future prosperity.
recession
-0.4
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So far, the federal government is expecting a decline in German economic output for 2023. That could change.
In order to give the transformation of industry an additional boost, the federal government wants to work out a “green industrial electricity price”. In the short term, however, energy security must also be guaranteed and losses in purchasing power mitigated, the report says.
The shortage of skilled workers is one of the main priorities for the coming year. The draft contains “options for action” to improve employment incentives for older people. Federal Chancellor Olaf Scholz wants fewer people to retire before they reach the statutory retirement age.
In order to encourage companies to invest, tax improvements should also take effect. Among other things, depreciation conditions would have to be designed more favourably. According to circles in the draft of the annual economic report, the federal government understands the increasing shortage of workers and skilled workers as a central economic policy challenge.
More: Endgame for German industry – three scenarios for the future