Economics Minister Habeck is likely to announce good news on Wednesday: the economic situation is better than expected. But major challenges remain.
Germany is unlikely to slide into recession this year as feared – the federal government wants to raise its economic forecast slightly. It expects gross domestic product to grow by 0.2 percent in 2023, as previously confirmed in government circles. Federal Economics Minister Robert Habeck (Greens) will present the annual economic report in Berlin on Wednesday.
In mid-October, the federal government lowered its economic forecast significantly, primarily because of the energy price crisis. At the time, she expected the economy to contract by 0.4 percent this year.
As early as mid-December, however, circles in the Ministry of Economic Affairs had said that economic development would be better. The government’s relief packages and the multi-billion dollar “defense umbrella” and the associated gas and electricity price brakes played a major role in this.
According to provisional figures from the Federal Statistical Office, Europe’s largest economy grew by 1.9 percent last year. Gloomy forecasts in view of the Ukraine war, record inflation and the energy price shock did not come true. For 2023, many institutes had predicted that economic output would shrink.
Skills shortage remains a major challenge
The federal government sees the increasing shortage of workers and skilled workers as a key economic policy challenge. According to a draft of the annual economic report, the growing shortage of staff in elementary areas such as health, care and education is already having far-reaching consequences for the current and future quality of life of people in Germany. A shortage of workers also complicates the implementation of future investments, also in the area of climate protection. The federal government wants to take countermeasures and, among other things, facilitate the immigration of foreign skilled workers.
Business associations see the global competitiveness of German companies increasingly at risk, as they recently made clear. They referred to the high tax burden and high energy prices in international comparison.
In order to promote investments in climate protection and digitization, the federal government is preparing to introduce an investment premium, as stated in the draft. Habeck had said that 2023 was all about industrial policy. The aim is to expand site security and to advance the fundamental change towards a climate-neutral and digital economy.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.