The economic disaster predicted last year at the start of the war in Ukraine appears to have largely been averted. And this is strange, the German researchers conclude, because Russian gas has actually been cut off. “But that’s not reflected in the economic figures,” says macroeconomist Edin Mujagic.
Although the German economy contracted in the third quarter of 2022 and stagnated in the fourth quarter, it has never come close to a recession. “That was partly due to the mild winter,” Mujagic says. ‘But the researchers looked at the figures. And they say the winter was colder than the average three years ago.’
“This indicates that the resilience of a market economy is quite good”
According to Mujagic, it is a good example of the resilience of the economy and its participants. “He’s able to adjust really well when the circumstances are right,” she continues. Mujagic means, among other things, lowering the heating, reviewing production processes and looking for alternative energy sources. “This indicates that the resilience of a market economy is considerable.”
Support
But that was preceded by government support, Mujagic says. Something that also applies to all European economies. And of course that support can’t last forever. It is also decreasing now.’ According to Mujagic, the support has also led to the biggest economic problem of the moment: inflation. “Everything was better than expected thanks to that resilience, but also partly thanks to the support,” he concludes. “And as we’ve said many times before, there’s no such thing as a free lunch in the economy.”
Therefore, Mujagic thinks that companies that survived the past years thanks to support, and which actually had no reason to exist, will now enter difficult times. “And it can be said that the price for the huge shock we have experienced will be paid by the end of the year, or in 2024.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
