Faced with the energy crisis, Germany fears inflation of 7% in 2023, according to the latest forecasts unveiled by the government on Wednesday 12 October. Berlin also expects a recession of 0.4%. In addition, growth for 2022 has been revised down to 1.4% and inflation up to 8%.
“We are currently experiencing a difficult energy crisis, which is increasingly turning into an economic crisis”, commented German Economy Minister Robert Habeck at a press conference. The German government hopes that the future shield on energy tariffs will limit price increases next year.
These forecasts confirm the estimates of the International Monetary Fund on Tuesday. The IMF sees the first European economy tipping into recession in 2023 (-0.3%), while it forecasts for France growth up by 0.7% next year.
“Without the effect of the gas price freeze, inflation would have been significantly higher in 2023”said the German Ministry of Economy in a press release.
At the end of September, Germany unveiled a 200 billion plan to subsidize, until 2024, the prices of energy consumed by households and businesses, which will curb inflation in 2023. Before the announcement of this device, the main German economic institutes said they expected a further surge in inflation of 8.8% for 2023.
The fall, then the halt at the beginning of September, of Russian gas deliveries to Germany, weighs down the country. Germany, which got 55% of its supplies from Russia before the war in Ukraine, has to get supplies elsewhere, at much higher prices. These tensions have caused the price of gas and electricity to explode in Europe, causing a surge in inflation and the cost of production in industry, the engine of German growth.