German government projects economic recovery driven by intensive energy

The German Economy Ministry sees “signs of a slight economic recovery” in the country, as energy-intensive industries have increased their production since the beginning of the year. “Electricity and gas now cost, on the wholesale market, almost the same as they did before the energy price crisis, so inflation continues to fall,” said Economy Minister Robert Habeck. “This fact increases the purchasing power of citizens and supports the recovery of private consumption”, added the government official.

The Government has slightly adjusted its economic growth forecast for 2024, from 0.2% in a February report to 0.3%, and expects growth of 1% next year. “Of course, 0.3% is not something we can be satisfied with”, highlighted Habeck. “Despite the signs of hope, I remain concerned about the structural problems of Germany as an economic location”, highlighted the person responsible for the economy, calling for the reinforcement of innovation, the reduction of bureaucracy and the resolution of the labor shortage.

A series of notable negative episodes, such as the Covid-19 pandemic and the energy crisis exacerbated by the war in Ukraine, caused a slowdown in Germany’s economic growth.

Record energy prices, especially natural gas, have had an impact on the economy as a whole, with energy-intensive industry continuing to play a key role. Globally, since their peak in 2022, prices have fallen almost to their pre-crisis level. However, fossil gas remains more expensive than before the crisis, when Russia provided the majority of the country’s gas demand.

Chancellor Olaf Scholz recently defended his government’s efforts to overcome the energy crisis, in the face of criticism from sector leaders. Scholz stated that energy prices have returned to pre-crisis levels, after “two years of change”, in which the country transformed its energy import structure, especially with regard to natural gas. This change contributed to the country becoming as competitive in terms of energy prices as it had been “for decades”, stated the chancellor.