Germany is set to narrowly escape a recession this year, the government said Wednesday, as Europe’s biggest economy weathers the fallout from the Ukraine war better than expected.
Industrial powerhouse Germany is forecast to eke out growth of 0.2 percent in 2023, the economy ministry said in its latest projections.
Back in October, when fears were running high about soaring energy costs in the wake of Russia’s war in Ukraine, Berlin was bracing for a contraction of 0.4 percent in 2023.
“The government has fended off the economic crisis,” Chancellor Olaf Scholz told lawmakers in Berlin.
“We have shown what we are capable of.”
Massive government intervention has helped keep the lid on energy costs for households and businesses after Russia cut deliveries of natural gas last year.
As well as racing to diversify supplies, Berlin has unveiled a 200-billion-euro ($212-billion) support package to cushion the energy crisis, including a cap on electricity and gas prices.
Mild winter weather and falling wholesale gas prices recently have further bolstered confidence that the expected downturn will not be as painful as initially thought.