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Post: Germany expects 0.4% economic recession and 7% inflation in 2023 (government)

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The German government expects to see a recession of 0.4 percent and inflation of up to 7 percent in 2023, according to data published on Wednesday, amid a severe energy crisis facing the country.

“We are currently experiencing a difficult energy crisis, which is becoming more and more an economic crisis,” German Economy Minister Robert Habeck told a news conference revealing the autumn forecast. The government expects a plan to cap energy prices to prevent price increases next year.

As for 2022, the government lowered its growth forecast to 1.4 percent and raised its inflation forecast to 8.0 percent, in line with the latest April forecast of 2.2 percent and 6.1 percent. .

The new numbers confirm the expectations announced this Tuesday by the International Monetary Fund, which predicts a recession in the leading European economic power in 2023, as well as in Italy, three years after the economic shock caused by the Covid-19 epidemic.

“Inflation would have been much higher in 2023 without the gas price freeze,” the German Economy Ministry said in a statement.

In late September, Germany released a €200 billion plan to support energy prices for homes and businesses through 2024, which would reduce inflation in 2023. 8.8. interest in 2023.

The German economy is suffering from a dwindling supply of Russian gas, which was suspended in early September. After Russian gas accounted for 55% of Germany’s pre-war supply, the country now has to source it from other sources at much higher prices.

The crisis caused a sharp rise in gas and electricity prices in Europe, which was reflected in inflation and a significant increase in the cost of production in the industrial sector, which is driving growth in Germany. That was a blow to German industrial production, which fell 0.8 percent in August, according to statistics institute Destatis.

The hardest hit industries were energy-intensive industries such as chemicals, steel, paper and glass, with output down about 9% since February. However, Berlin remains optimistic about finding an alternative to Russian gas, with Habek saying, “We are making progress in solving the Russian import problem.”

As a result of diversifying its sources of supply to countries such as Norway, the Netherlands and the United States, Germany is rebuilding its gas reserves faster than expected and has managed to fill its deposits by 94.67%, close to its target. 95 percent in early November.

Source: EuroNews

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