German Economy Holds Up In 2022 Despite Ukraine War Fallout
Faizan Hashmi Published January 13, 2023 | 05:10 PM
Frankfurt, Germany, (UrduPoint / Pakistan Point News - 13th Jan, 2023 ) :The German economy grew a better-than-expected 1.9 percent last year, official data showed Friday, as government relief measures cushioned Europe's export giant from an energy crisis triggered by the war in Ukraine.
The expansion was slower than the 2.6 percent growth in 2021, with GDP "stagnating" in the fourth quarter as inflation surged following Russia's invasion of Ukraine, statistics authority Destatis said.
But 2022 growth surpassed the 1.8 percent forecast by analysts, as government interventions and a mild winter helped Germany weather sky-high energy costs seen after Moscow slashed crucial gas supplies to Europe.
It was also higher than the 1.4 percent expansion forecast by the government last October.
Analysts and the government have been predicting that Europe's largest economy will fall into recession this year, but the GDP figures -- and a string of recent indicators -- suggest it may dodge a severe downturn.
"Through decisive actions in the past year, we made the crisis manageable," Economy Minister Robert Habeck said in response to the growth data.
"In a short space of time, we pushed through legislative packages and mobilised large sums of money to support the economy and unburden consumers," he said.
But Destatis president Ruth Brand outlined the challenges faced by Germany, from "extreme energy price increases" to supply chain bottlenecks, rising food prices and a shortage of skilled workers.
"Despite these difficult conditions, the German economy held up well overall in 2022," she added.
A massive 200-billion-euro ($216 billion) support package announced in September to limit household energy bills and support businesses has also taken the sting out of price rises, analysts say.
The government itself had forecast in October that the economy would shrink 0.4 percent over the whole of this year.
But a string of indicators, which for months flashed red, are now turning around and suggest that the downturn will be less severe than initially feared.
Some analysts warn the reprieve may prove temporary given significant risks that lie ahead.
Germany will likely be unable to dodge a recession -- two consecutive quarters in which the economy shrinks -- said Carsten Brzeski, head of macroeconomics at ING.
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