Growing concern: Habeck sees German economy ahead of "serious times"

Created: 2022-10-13 05:15

By: Patricia Huber

The Ukraine war also burdens the German economy.

The federal government has drastically lowered the economic forecast.

Economics Minister Robert Habeck speaks of "serious times".

Berlin – The federal government has significantly lowered its economic forecast because of the energy crisis.

Economics Minister Robert Habeck (Greens) spoke on Wednesday in Berlin at the presentation of the autumn projection of "serious times".

According to the forecast, 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.

Growth of 2.3 percent is expected for 2024.

Habeck worried: "We are currently experiencing a serious energy crisis"

In the spring projection, the federal government still expected an increase in gross domestic product of 2.2 percent this year and 2.5 percent next year.

"We are currently experiencing a serious energy crisis, which is increasingly developing into an economic and social crisis," said Habeck.

The trigger for this crisis is the attack by Russian President Vladimir Putin on Ukraine.

Russia stopped gas supplies.

As a result, energy prices are still at a very high level, according to the ministry.

High prices slowed down industrial production.

The loss of purchasing power is also leaving its mark on price-adjusted private consumption, which is likely to decline next year.

"These numbers are bad," Habeck said.

But it could have been a lot worse.

The numbers also show "that the measures we took (...) worked."

Economics Minister Robert Habeck sees "serious times" for Germany.

© IMAGO / Political Moments

Federal government prognosis: Defense shield to curb inflation

Habeck also sees the figures for the autumn projection as confirmation of the effectiveness of the previous crisis policy.

So far, the federal government has "successfully" defended itself against the Russian government's attempts at destabilization.

He referred in particular to estimates by experts from the spring, who would have predicted an economic downturn of between three and nine percent in the event of a complete loss of Russian gas supplies.

The federal government had announced a defense shield of up to 200 billion euros to support consumers and companies because of the sharp rise in energy prices.

The planned gas price brake is also to be financed from this.

According to Habeck's forecast, this will dampen the increase in consumer prices in the coming year.

The federal government expects an inflation rate of 8.0 percent in the current year and 7.0 percent in the coming year.