MarketAfter all, won't the recession be so bad?

After all, won’t the recession be so bad?

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Energy crisis, record inflation, delivery bottlenecks: the economy is heading into an extraordinarily difficult winter semester. But maybe things won’t be so bad after all.


Darker, darker, darkest: The negative advantages of economics have not been enough lately. Historical declines in many economic data came together, so to speak.

At the same time, energy and food prices rose. The lawsuits were great, especially in Germany. Deeper dips than ever and expert assessments about a serious recession approaching were legion. “Typical German pessimism,” as Robert Halver, capital markets expert at Baader Bank puts it:

It probably won’t be as deep black as we’ve seen so far.

Robert Halver, capital markets specialist at Baader Bank

And indeed: there are increasing signs that his mood may be worse than the situation.

mild weather helps

Facts anyone? The first thing to do is to talk about the weather, which we Germans especially love to do. The exceptionally mild weather in the fall makes the “worst case” scenario less likely. So, due to the lack of Russian supply, gas has to be rationed and companies are forced to shut down.

The German Weather Service also expects a “pretty mild winter” in Germany. This, in turn, “could help us maintain the required at least 20 percent savings in gas consumption in the coming months,” says Klaus Müller, Head of the Federal Network Agency.

In addition, our gas storage facilities are fuller than ever before in the history of the Federal Republic of Germany. That means nine to ten weeks of supply security, even if all the weather forecasts turn out to be false reports.

China policy is important to German industry

But in addition to the positive aspects of energy supply, there is another factor that is particularly important to Halver:

China has realized that the zero Covid policy no longer makes sense.

Robert Halver, capital markets specialist at Baader Bank

This means that “finally preliminary products” will come back from China to “reduce our huge backlog of orders”. In fact, German industry has seen a decline in new business lately, but order books are still busier than ever.

It takes eight months at full capacity to fully process them. This backlog, and with it the annoying problem of delivery bottlenecks that have long paralyzed the economy, can actually be put to an end.

This will ultimately help stabilize production in companies and keep the labor market intact.

“Double Bang” is coming

Also, the federal government’s relief measures – even if they lead to higher national debt – will soon have their effect. After all, gas and electric price brakes or a higher child bonus are supposed to keep inflation under control.

This is why many economists believe that inflation will likely peak in November or December. This can have an impact on consumption, which is very important for the economy.

After all, 200 billion euros of additional savings have accumulated during the corona pandemic, which will eventually have to be spent.

We can’t escape the recession

All these arguments sound too good to be true, and there should be no misunderstanding: We probably won’t be able to avoid a recession.

However, with a bit of luck and no further pullback, it may actually just be the “light” version, rather than a serious setback.

Source: ZDF

Ben
Ben
I am Ben Stock, a highly experienced professional with over 7 years of experience in the news industry. I specialize in market section writing and have published numerous high-quality articles on various topics under my name. My passion for journalism has helped me to develop an in-depth understanding of the industry, enabling me to stay up-to-date on all the latest trends and developments.

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