In 2022, although the German economy faced many challenges, such as the crisis in Ukraine, the sharp rise in energy prices, and the shortage of skilled workers, it generally stood firm and achieved positive growth. Among them, there are not only objective factors such as climate change, but also the relief measures launched by Germany and its strong economic resilience. Whether Germany will fall into economic recession in 2023 has attracted much attention. This depends not only on Germany's own economic resilience, but also on the Ukrainian crisis, the energy crisis and the progress of international economic cooperation.
The preliminary statistical data released by the German Bureau of Statistics recently showed that after price adjustment, Germany's gross domestic product (GDP) in 2022 increased by 1.9% in real terms compared with the previous year. The German Bureau of Statistics said in a statement that despite many challenges, the German economy will still recover in 2022, with an increase of 0.7% compared with 2019 before the outbreak of COVID-19.
"The overall economic situation of Germany in 2022 is mainly affected by the crisis in Ukraine, with the consequences of a sharp rise in energy prices. In addition, it is also affected by the aggravation of material and transport bottlenecks, a sharp rise in food prices, a shortage of skilled workers, and the COVID-19 epidemic, which has been alleviated but still continues," said Ruth Bland, director of the German Bureau of Statistics, "Despite a series of continuous difficulties, the German economy as a whole has stood firm in 2022."
German data show that the service and manufacturing industries in Germany will grow in 2022, but the construction industry will decline due to the shortage of raw materials and skilled labor, high construction costs and other factors. In addition, private consumption expenditure is the most important driver of German economic growth in 2022.
In this regard, some analysts pointed out that the smooth and positive growth of the German economy in 2022 is the result of multiple factors, including objective factors such as climate change, as well as the relief measures launched by Germany and its strong economic resilience.
On the one hand, European countries, including Germany, have generally experienced a warm winter this year, resulting in an unexpected reduction in energy demand, and energy prices continue to decline.
Since last Christmas, the temperature in Germany has gradually increased, which is abnormal compared with the winter temperature over the years. On January 1, 2023, the temperature in Germany reached above 20 ℃. In response, the World Meteorological Organization said that Germany had never observed such a mild temperature at the turn of the New Year since records were made in 1881.
The arrival of warm winter is a timely help to Germany, which is short of natural gas supply. Due to the decrease in natural gas demand caused by warm weather, Germany's natural gas reserves are more sufficient than in previous years. According to the German network data, up to now, Germany's natural gas demand in winter this year is far lower than originally expected, and the filling level of German gas storage facilities recorded on February 1 is still around 79%. German network experts said that Germany's natural gas supply was still stable, and the possibility of natural gas shortage this winter would be less and less.
Affected by the abnormal warming of the European winter climate, since January, the natural gas price of the Dutch Centre for the Transfer of Ownership (TTF), known as the "European natural gas price benchmark", has been falling for several weeks. On January 18, it once fell 6.1%, close to the lowest level in 16 months. At present, the Dutch TTF natural gas futures price is about 56.50 euros per megawatt hour, the lowest level since the outbreak of the Russia-Ukraine conflict.
On the other hand, since the energy crisis, Germany has successively launched several rounds of burden reduction and relief plans to brake and intervene the domestic natural gas and electricity prices, which has achieved good results. It is understood that Germany formulated a draft law on the "brake" mechanism of natural gas and electricity prices in November last year, which has been adopted and has come into force since this year. According to the law, the "brake" mechanism of German natural gas and electricity prices will be officially launched from March 1, 2023 and will continue until April 30, 2024, but the price subsidy will take effect from January 2023.
At the EU level, after months of intense negotiations, the EU member states finally reached an agreement on the EU gas price ceiling at the end of last year, and decided to set the gas price ceiling at 180 euros per megawatt hour to help European consumers and enterprises cope with the high energy prices. The price limit mechanism will be launched on February 15, 2023. The introduction of this mechanism will also have a certain impact on the "cooling" of energy prices in Germany.
In addition, Germany's strong economic resilience, especially the rapid recovery of the service industry, has also played a role in promoting the positive growth of the German economy, and to some extent prevented the German economy from recession. Stephen Kuss, deputy director of the Kiel Institute for World Economics, said, "The German service industry can continue to recover from the downturn of the COVID-19 epidemic, which not only supports the growth trend of the German economy, but also promotes a significant increase in private consumption.".
As for the manufacturing sector, Stephen Kuss said that previous orders had a stabilizing effect on the German industrial economy, otherwise the industrial economy would be more affected by the weakness of new business. The German Ministry of Economy and Climate Protection recently said in a press release that after the weak start of the fourth quarter of last year, the industrial output of Germany began to stabilize in November 2022, and business sentiment improved. It is expected that the gradual easing of material shortage will further promote industrial activities in the coming months.
In 2023, as the largest economy in the euro area, whether Germany will fall into economic recession has attracted much attention. According to the annual economic report released recently by the German Ministry of Economy and Climate Protection, Germany's economic forecast for 2023 is better than that for autumn. According to the report, due to the impact of energy price shocks and interest rates, Germany's economy will slow down this year, but it will still achieve economic growth of 0.2%, compared with the previous forecast that Germany's GDP will decline by 0.4% this year.
In response, experts said that as the European Central Bank continued to raise interest rates and further depress demand, Germany's consumption, investment, import and export tended to be depressed. The German economy may continue to slow down in the first quarter of this year. In combination with the economic downturn in the fourth quarter of last year, the German economy is likely to experience a "technical recession". Whether the German economy, which is on the verge of recession, will fall into a substantial recession in the future depends not only on Germany's economic resilience, but also on the progress of the Ukrainian crisis, energy crisis and international economic cooperation.