Germany’s economy ministry on Friday published that the country is expected to narrowly escape recession and achieve modest growth in the first quarter of the year.
According to the ministry’s report accessed by Reuters, “A technical recession of two negative quarters in a row appears to have been averted.”
The report also revealed that current projections indicate a small year-on-year rise in gross domestic product for the entirety of 2023.
Leading economic institutes are predicting a 0.3 per cent growth rate for the German economy this year.
According to the report, economic indicators suggest significant growth in the first quarter of the year, with industrial and construction output being the driving forces behind this progress.
The report notes that this growth is the result of an easing of material bottlenecks, declining energy prices, and favourable weather conditions.
The Joint Economic Forecasts by the institute predict that GDP will expand by 0.1per cent in the first quarter, following a 0.4 per cent contraction in the fourth quarter of 2022.
The report describes the start of the year as “favourable,” and the German economy benefited from a mild winter and high gas storage levels, leading to a significant reduction in energy prices, according to the Ministry.
According to reports, “Consumer sentiment is expected to continue its recovery in the coming months, although inflation-related losses in purchasing power continue to weigh on the economy.”
The report anticipates that inflation rates will continue to decline, although they will remain elevated. The expected range for inflation in 2023 is 5.4 per cent to 6.6 per cent, while it is predicted to be 2.1 per cent to 3.5 per cent in 2024.
However, the ministry noted potential risks to the economic outlook, including weak private consumption, the potential deterioration of conditions in construction, issues in financial institutions, and geopolitical uncertainty caused by the war in Ukraine.