German economy to rise in 2023

As Europe’s largest economy seeks to sidestep the worst of the energy crisis with the aid of softening energy market prices and state aid, Germany’s IfW became the most recent economic institute to increase its growth projection for 2023 on Thursday.

The Kiel-based organisation has revised its projection for 2023’s gross domestic product growth from a 0.7% decline to a 0.3% increase.

The Ifo institute updated its 2023 projection on Wednesday as well. It still expects a 0.1% decline in 2023, although this decline will be less severe than the 0.3% contraction previously predicted.

In contrast to the Ifo’s 1.6% growth prediction for 2024, the IfW anticipates growth of 1.3%.

“The outlook for the economy has brightened somewhat – amid high uncertainty,” the IfW said in a statement.

The institute attributed the improved outlook to recent drops in gas and electricity prices as well as upcoming government aid measures intended to reduce energy costs for businesses and households.

The IfW predicted that inflation would drop from its prior projection of 8.7% to 5.4% in 2023. 8.0% should be the inflation rate in 2022, it added.

The RWI institute stated on Thursday that it also anticipates inflation to moderate the following year, dropping to 5.8% in 2023 from this year’s 7.9%.