No recession in Germany, more growth in the euro area. Prices will not rise as much this year either. The EU Commission is more optimistic about the future.
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In view of the energy crisis, which has been mastered so far, Germany can narrowly avoid a recession in 2023, according to the EU Commission. The authorities in Brussels are expecting a small increase of 0.2 percent in gross domestic product (GDP), after having estimated a minus of 0.6 percent in November.
In addition, the euro area is likely to grow more strongly than expected, at 0.9 percent, as can be seen from the winter forecast presented on Monday. In the autumn, the Commission had only predicted a plus of 0.3 percent. Growth of 0.8 percent is expected for the EU, which is 0.5 percentage points more than in autumn. This will probably avert the technical recession initially feared for the turn of the year – an economic contraction lasting two quarters.
The risk of a gas shortage has fallen
According to the Brussels authority, surveys indicate that confidence in economic development has increased. Accordingly, the currency area, which grew to 20 members after Croatia's accession, should avoid a contraction of the economy in the first quarter. “The risks of recession and gas shortages have receded and unemployment remains at record lows,” said EU Economy Commissioner Paolo Gentiloni.
The risk of a severe recession has recently also decreased in Germany – above all because the feared gas shortage situation as a result of a lack of Russian deliveries could be averted. For the year as a whole, the federal government expects growth of 0.2 percent and the International Monetary Fund (IMF) 0.1 percent.
The expected growth rate for 2024 remains at 1.6 percent for the EU and 1 .5 percent unchanged for the euro area. Well-filled gas storage facilities, lower consumption and more gas suppliers are given as reasons for the development.
They've been worth less and less for months. This year prices will not rise as much as in 2022.
Inflation is weakening
In terms of inflation, things are unlikely to be as bad in 2023 as initially feared. The EU Commission is expecting an inflation rate (HICP) of 6.3 percent calculated for a European comparison in Germany in 2023; in November it had predicted a value of 7.5 percent. For the euro zone, it is now estimating an inflation rate of 5.6 percent after 6.1 percent in the autumn forecast.
As energy prices have now fallen sharply compared to the highs last year and the supply chain If problems subside, the ECB could possibly lower its own inflation forecasts in March, as Croatia's central bank chief Boris Vujcic recently told the Reuters news agency. In December, the European Central Bank (ECB) had estimated an increase in consumer prices of 6.3 percent for 2023.
According to the EU Commission, there will be even more relaxation in 2024 – then it expects an inflation rate of 2, 5 percent.
iw/hb (rtrs, dpa)