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The government predicts a recession and high inflation of 7% in 2023

Due to the constantly high energy prices, the federal government expects a sharp rise in prices also in 2023. The German economy will contract.

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The federal government expects prices to continue to rise sharply over the next year. Due to the continuous increase in energy prices, despite the brake on gas prices, an inflation rate of 8% in 2023 and 7% in 2023 can be assumed, the Federal Ministry of Economy explained Wednesday in its autumn projection. The German economy is therefore facing a decline of 0.4 percent in the next year.

“As a result of the Russian war of aggression in Ukraine,” economic growth this year will amount to only 1.4 percent, he said. In the spring, growth of 2.2% was assumed this year and even 2.5% next year. “The main reason for the downward correction from the spring projection is the stop to Russian gas supplies,” the ministry said.

The energy crisis is therefore considerably slowing down industrial production and private consumption. At the same time, consumer prices are likely to remain “at a high level” and “without the price damping effect of the brake on gas prices, the inflation rate would again be significantly higher, especially in 2023” the ministry added.

Economy Minister Robert Habeck (Verdi) spoke of “serious times” when presenting the forecast. “We are currently experiencing a severe energy crisis, which is increasingly turning into an economic and social crisis,” said Habeck.

Due to the constantly high energy prices, the federal government expects a sharp rise in prices also in 2023. The German economy will contract.

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