As of: February 13, 2024, 5:17 p.m
By: Amy Walker
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Press
Split
According to the head of the Chancellery, Wolfgang Schmidt, the economy is not in recession at all.
The economy will even grow in 2024.
Berlin - The mood in the economy could hardly be worse at the moment - in fact, it is worse than it has been since 2020.
At least that's what the Mannheim Center for European Economic Research (ZEW) found in a new analysis.
The barometer for the current situation fell by 4.4 points to minus 81.7 points in February - worse than it has been since the pandemic.
Other economic experts, such as the ifo Institute and the Institute for Swiss Economic Policy, also see the risk of recession in Germany as particularly high.
According to a current evaluation, the risk of recession is only as high in the Netherlands and Great Britain as in Germany.
SPD politician: “We don’t have a recession”
Meanwhile, the head of the Chancellery, Wolfgang Schmidt, has a different opinion.
“We don’t have a recession,” said the SPD politician on Tuesday (February 13) in Berlin at the Association of Berlin Merchants and Industrialists (VBKI).
“We will see growth this year,” he added, pointing to very high investments by the federal government.
In addition to the 58 billion euros in the budget, 49 billion euros would come from the so-called Climate and Transformation Fund (KTF).
There are currently no signs of a recession.
“The labor market is very stable.” Real wages have also risen again, which will lead to increased purchasing power.
Federal Chancellor Olaf Scholz (SPD) and Wolfgang Schmidt (SPD), head of the Federal Chancellery.
© Bernd von Jutrczenka/dpa
Schmidt referred to further necessary reforms, especially in reducing bureaucracy.
The government has also passed the Skilled Immigration Act as a measure to combat the shortage of skilled workers.
However, because of the debt brake in the Basic Law, Germany cannot take the path like the USA of financing investments through massive debt.
The Ukraine war alone means a burden on the 2024 federal budget of around 17 billion euros.
German economy with one foot in recession
Politicians and experts have been arguing about the state of the national economy for months.
While Chancellor Olaf Scholz emphasized that the situation is better than the mood, Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) believe additional stimulus for the economy is necessary.
The ZEW barometer measures exactly this mood - and has reached its lowest level since June 2020. "The German economy is not doing well," said ZEW President Achim Wambach.
The government had repeatedly accused it of downplaying the state of the economy.
Institutes believe that Europe's largest economy will experience, at best, slight growth this year.
The ifo Institute expects an increase of 0.7 percent, while the trade union-affiliated IMK predicts a decline of 0.3 percent - it had already fallen at this rate in 2023.
The German economy currently has one foot in recession.
It shrank by 0.3 percent in the fourth quarter of 2023.
If there is another decline in the current first quarter, it will be referred to as a technical recession.
The Bundesbank expects “at best” stagnation from January to March.
(wal/Reuters)