High energy prices and the deterioration in the financing environment are having a negative impact on the German economy.
(Photo: dpa)
Berlin The experts at the Leibniz Institute for Economic Research in Halle (IWH) expect the economy in Germany to be weak in 2023. According to the institute’s spring forecast published on Tuesday, gross domestic product will only increase by around 0.4 percent. The scientists cited high inflation, higher real interest rates and declining real incomes as the main reasons.
With the end of the pandemic and high inflation, opposing forces are currently at work in many countries, according to the IWH. The key interest rate hikes that were to be expected due to inflation slowed demand in the construction sector, for example. On the other hand, according to the IWH, it is positive that many companies have recently increased their employment. Energy prices have also recently fallen drastically after record levels in late summer.
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Nevertheless, the costs for energy are still significantly higher than before the beginning of the gas shortage in Europe in the summer of 2021. “In the manufacturing industry, some energy-intensive goods are currently not being produced in Germany due to a lack of profitability, but are being imported,” said Oliver Holtemöller, Head of the Department of Macroeconomics at the IWH.
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