German economy to shrink in 2023, government says

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The German government has today slashed its growth forecast, predicting Europe's top economy will shrink this year as it battles high inflation, elevated energy prices and a manufacturing slump.

This is a marked downgrade from its last estimate in April, when Berlin forecast growth of 0.4% in 2023.

"In a difficult geopolitical environment, we are emerging from the crisis more slowly than expected," Economy Minister Robert Habeck acknowledged in a statement. Inflation is expected to come in at 6.1% this year, before declining to 2.6% next year and 2% in 2025, the economy ministry said."The course for a sustainable economic recovery has been set: the decline in inflation is significant, and with it, real incomes are rising again," he added.

 

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