German economy grows by 1.9% in 2022 despite energy crisis

In 2022, the German economy performed better than expected. Despite the sharp increase in energy prices, record inflation and supply problems, gross domestic product (GDP) grew by 1.9% compared to the previous year, according to the Federal Statistical Office’s initial estimate. Economists, on average, expected a slightly lower figure. In 2021, the German economy grew by 2.6%. According to economists, the recession feared in 2023 will be relatively mild, with GDP falling by less than one percent. Some institutions even expect modest economic growth due to the fact that the state saves individuals and companies from spending billions on expensive energy. It is likely that this will also lead to an increase in the state budget deficit in 2023. According to economists’ calculations, the federal budget, state budgets, local and social insurance funds spent more money than they received last year. However, after two pandemic years, Germany is likely to stick to the European debt rule again, with a public budget deficit of around two percent: The European Stability and Growth Pact allows EU countries to have a budget deficit of no more than three percent and a total debt of no more than 60 percent of nominal GDP. EU countries have temporarily suspended these rules due to costly coronavirus aid programs. It is planned that the pact will begin to operate again on a regular basis from 2024.