The dreaded recession may not occur this year according to experts
Despite the blows of the coronavirus epidemic, the war in Ukraine, the problems in the supply chain and the high energy prices, the Gross Domestic Product of Germany registered a growth of 1.9% in 2022 in the year-on-year comparison , as announced this Friday by the Federal Statistical Office. The first economy of the European Union achieved a higher GDP than what specialized institutes and banking economists calculated. In 2021 the economic growth of Germany was 2.6%. The feared recession for 2023 will be, according to expert estimates, less than 1% and much milder than initially expected. Some institutes even expect a small growth for this year thanks to multimillion-dollar aid from the federal government for companies and individuals to deal with high energy prices.
This will, however, cause Germany’s deficit to increase again in 2023, after in 2022 the state, the 16 federal states, the municipalities and the Social Security spent more money than they received. The Ministry of Finance recently highlighted that the different crises forced last year to assume a new debt of 115,400 million euros, 23,500 million less than initially calculated, thanks above all to the appreciable increase in tax revenue. This debt does not include the extraordinary expenses assumed by the Executive with the 100,000 million euros of additional budget to modernize the Bundeswehr, the federal Army, or the up to 200,000 million to curb energy prices in this country, of which until now 30,000 million have been spent.
Despite everything and after two years of pandemic, the German public deficit will comply with the debt rules for EU member countries by not exceeding 2%. The European stability and growth pact allows member states to achieve a budget deficit of a maximum of 3% and a total debt that does not exceed 60% of nominal GDP, although due to the expensive aid programs due to the coronavirus epidemic these standards have been temporarily suspended. The agreement within the EU contemplates that they will be active again on a regular basis from 2024.
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