Germany recession fears as economy set for freefall as Putin turns screw on Scholz

The largest economy in Europe will shrink by about one percent in 2023, if economists at Deutsche Bank are correct. Forecasts have taken a particular turn for the worst since February given Germany’s dependence on Russian gas.

Bloomberg also cited declining natural gas supplies and a downturn in the US as reasons for the crash.

Estimates from the International Monetary Fund (IMF) are slightly less critical but are still far from cheery.

These predict that the German economy will only grow by 1.2 percent in 2022.

This would be down from perfections of two percent in early May.

The IMF also forecasts a further decline in growth in 2023 of 0.8 percent.

But Deutsche Bank economists said the situation in Russia (or, rather, in Ukraine) suggests economic matters across the Continent are set only to get worse.

They, quoted in Bloomberg, said: “It seems reasonable to assume that Russia will continue to look for ways to disrupt economic activity in Europe in retaliation for Western sanctions and financial and military support for Ukraine.

“This might not necessarily mean a complete shutoff [but] the impact on industrial output and economic uncertainty will almost certainly push the German economy into recession in the second half of 2022.”

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“And to do so, we have to reduce our gas consumption.

“I know that this is a big ask for the whole of the European Union, but it is necessary to protect us.”

Mrs von der Leyen asked member states to reduce their gas consumptions by 15 percent.

Economist James Meadway earlier this month argue that Germany’s economic model has “run out of road”.

He wrote in the New Statesman that, despite the great issues facing the German state, “neither the current government nor its opposition appears willing to break with the post-reunification economic legacy”.

Mr Meadway added: “It will be German workers that are forced to pay the price.”

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