The federal government apparently no longer expects a recession in 2023

Train with new Volkswagen cars

The federal government expects the German economy to stabilize further.

(Photo: dpa)

Berlin The federal government is no longer expecting a recession in Germany for the current year. In its latest economic forecast, which Federal Economics Minister Robert Habeck (Greens) will present next Wednesday with the annual economic report, the government is assuming gross domestic product (GDP) growth of 0.2 percent for 2023. The Handelsblatt learned this from informed circles.

In October, the government had expected a decline of 0.4 percent. For 2024, it now forecasts growth of 1.8 percent. The Reuters news agency first reported.

However, the figures from the new forecast are still provisional. They are subject to change before the annual economic report is published. There were still significant revisions to the forecast in October because the energy price brakes were still being incorporated. This time, however, major changes are not to be expected.

According to Reuters, the government is also reducing its inflation expectations for the current year slightly to six percent. In the autumn projection, she had assumed seven percent. A decline in inflation to 2.8 percent is now expected for 2024.

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With its forecast that there will be no shrinkage in 2023, the federal government would still be in the minority. However, voices have recently increased that do not consider a recession to be a foregone conclusion.

Economy was better than expected

The Kiel Institute for the World Economy (IfW) expects growth of 0.3 percent. And Deutsche Bank, which previously came up with horror forecasts, only expects stagnation. In 2022, the German economy had grown by 1.9 percent despite the war and the energy crisis.

On the other hand, the German Savings Banks and Giro Association (DSGV) was surprisingly pessimistic on Wednesday, which still expects GDP to fall by 0.8 percent in 2023. However, the outgoing DSGV President Helmut Schleweis also stated: “A recession will probably not hit the economy as hard as feared last autumn.” The companies, especially the medium-sized companies, are in a robust position.

“We are currently not seeing any wave of insolvencies either,” said Schleweis. The earnings situation is good on average and the order books are full. However, the order backlog of German industrial companies is beginning to crumble.

>> Read here: German economy will grow by 1.9 percent in 2022

According to data from the Federal Statistical Office on Wednesday, the stock in the manufacturing sector in November was 1.2 percent lower than in October after calendar and seasonal adjustment. The statisticians justified the development, among other things, with a decline in incoming orders. In addition, the supply chains would have relaxed.

However, the order backlog for a capacity utilization of the companies is still sufficient for a little more than seven months, albeit with large differences between the sectors. The range of orders on hand for manufacturers of capital goods is 10.7 months, while for manufacturers of intermediate goods and consumer goods it is 3.7 and 3.4 months, respectively.

With agency material.

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