- Commenting on forecasts predicting 0.2% growth this year, German Economy Minister Robert Habeck acknowledged last week that the outlook is “dramatically bad.”
German Factory Malaise Deepens as Activity Unexpectedly Down
- German February composite PMI index slips to 46.1; est. 47.5
- French activity gauge improves to 47.7, signaling recovery
21 Feb, 2024 15:23
Ukraine conflict cost Germany over €200bn – expert
For years, Germany’s prized industrial sector had been fueled by relatively inexpensive Russian gas. However, after Russia launched its offensive against Ukraine, the government in Berlin decided to forgo Moscow’s energy, switching to costlier alternatives from multiple sources, including American liquefied natural gas.
In its article on Wednesday, Die Rheinische Post quoted Fratzscher as saying that the “economic costs for Germany after two years of the Ukraine war lie distinctly above 200 billion euros.”
He clarified that in 2022, growth was down by 2.5%, translating into approximately 100 billion euros in losses, with the German economy shrinking to a comparable extent in 2023.
According to Fratzscher, accelerating inflation in Germany has hit low-income workers particularly bad.
- Experts put the loss from the combined negative effect that the Covid-19 pandemic and the Ukraine conflict have had on the German economy at €240 billion in 2022-2023.
The researchers also cited misguided policies adopted by the German government during this period, particularly the decision to phase out nuclear energy production.
- The only apparent winners of the current situation are defense contractors, a report cited by Die Rheinische Post suggested.
On Monday, Germany’s central bank assessed that the country’s economy may contract further in the first quarter of 2024, with no recovery in sight.
“With the second consecutive decline in economic output, the German economy would be in a technical recession,” the Bundesbank stated, referring to the final quarter of 2023, when the country’s GDP shrank 0.3% in annual terms.
Earlier, the DIHK chambers of industry and commerce revealed the findings of a poll conducted among more than 27,000 German companies. According to the survey, the majority of businesses also expect the economy to contract 0.5% this year.
- Commenting on forecasts predicting 0.2% growth this year, German Economy Minister Robert Habeck acknowledged last week that the outlook is “dramatically bad.”
- Finance Minister Christian Lindner, in turn, noted that the situation is “embarrassing and dangerous in social terms.”
Germany on Wednesday said that it was slashing its expectations for gross domestic product growth for 2024 to 0.2%, down from a 1.3% estimate previously.
The country narrowly avoided a recession at the end of 2023 and has faced a series of economic crises.
Germany slashes 2024 growth outlook
The economy has lurched between stagnation and recession in recent quarters, with Germany battered by what Habeck has described as "a perfect storm."
The German Cabinet has approved an economic forecast revising growth down to 0.2% this year — well below a previous forecast of 1.3%.
"We are coming out of the crisis more slowly than hoped," said Economics Minister Robert Habeck, presenting the report.
"The fact that the global economic environment is unstable and global trade growth is historically low is a challenge for an export nation like Germany,"
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