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Germany is heading into recession: Economic institutes are forecasting long-term losses in prosperity

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According to leading economic research institutes, Germany is heading straight into a recession – with a loss of prosperity and severe consequences for consumers. “The loss of prosperity due to the outflow of income due to higher energy prices will also last in the longer term,” said economic researcher Torsten Schmidt from the Leibniz Institute for Economic Research on Thursday in Berlin. “This is not a temporary phenomenon, it will keep us busy for a long time.”

In their autumn report, the economic researchers of several institutes predict a recession for Germany: the economy will shrink for three quarters in a row, in the summer quarter that is coming to an end, in autumn and at the beginning of 2023. For 2022 as a whole, the experts are still expecting a small one because of the better first half of the year Economic growth of 1.4 percent, for 2023 they then predict a decline in economic output of 0.4 percent.

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“The main burden is currently on private households, who have to accept a massive loss of purchasing power. And that will intensify over the course of the next year,” said economist Schmidt. Most companies, on the other hand, are still coping quite well with the situation.

Timo Wollmershäuser, Ifo Institute · Leibniz Institute for Economic Research at the University of Munich e. V. (lr), Klaus Weyerstraß, Institute for Advanced Studies Vienna, Torsten Schmidt, RWI · Leibniz Institute for Economic Research, Stefan Kooths, Institute for the World Economy IfW Kiel and Holtemöller, spokesman, Leibniz Institute for Economic Research in Halle.
© Photo: dpa/Britta Pedersen

The researchers thus assess the economic situation as significantly worse than in the spring. They almost halved their forecast for 2022. In April they had still expected growth in the German economy of 2.7 percent in the current year and 3.1 percent in the coming year. The researchers do not expect the tension on the energy markets to ease until 2024, and with it an economic recovery.

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However, the institutes are not currently expecting a gas shortage. “On average, no gas shortage is to be expected in Germany in the coming winter,” said Schmidt. However, the supply situation remains extremely tense. (dpa)

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Source: Tagesspiegel

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