German Economy Could Face A Recession In 2023

German Economy Could Face A Recession In 2023 by Emily Clark last updated on October 17, 2022

In September, German inflation officially touched 10% and, in doing so, raised fears of a recession in 2023 (next year). Experts believe that inflation was pushed by higher food and energy prices.

During last month, inflation was only 7.9% which raises the further alarm that inflation is getting out of hand. Ever since the Russian-Ukraine war, energy prices have been soaring all over the world. Europe, in particular, relies heavily on Russian gas and is now facing a gas shortage.

The data from the federal statistical office suggest that energy prices increased by 43.9% this year when compared to the month of September last year.

German Government Is Trying To Tackle Inflation

The German government is doing a lot of things to ensure that inflation is kept at bay. For example, it introduced a 9 ticket for public transport along with a fuel subsidy. However, that subsidy has also ended, which means inflation could go even higher!

Just a few days ago, Olaf Scholz (Germany Chancellor) announced a new relief package for energy products. According to estimates, it will be worth around 150 billion to 200 billion.

This is an indication that the German government is really serious about tackling inflation!

German Economy Could Face Recession

Earlier, a group of experts painted a rather bleak picture that showcased that Germany is heading towards a recession. Similar fears are already present for other countries as well, such as USA and UK!

Experts have listed the following factors which could lead to a recession in Germany:

High energy prices in the country.
Gas market crisis and the arrival of winter.
A drop in consumer purchasing power.

With a combination of all these factors, German is heading straight towards a recession! If this continues, the largest economy in Europe will experience a shrinkage in 2022!

Another thing that has made the matter worse is the global pandemic. The recovery from that problem was already incomplete, which made things even worse!

For the next year, the inflation forecast is expected to be around 8.8% which will be high but still lower than 10%!