Contrary to previous expectations, the German economy is still growing. Where previously there was talk of a 0.2% contraction, there now appears to be a 0.3% growth. And that’s good news according to BNR’s in-house economist, Han de Jong.
According to De Jong, the reason for the expected sudden growth of the German economy is the sharp drop in energy prices. The forecast comes from a time when both gas and oil prices were very high, says De Jong, “and since they’ve fallen, it gives a boost to that economy.”
While he has not yet been able to read the report, De Jong believes that Germany will also benefit from the Chinese economy, which is once again fully open. And above all because the company is unlocked again, he emphasizes. This means that exports to China are recovering which is extremely important for Germany and its economy.
Netherlands
The expected economic growth will also have an impact on the Netherlands, because the Netherlands is largely dependent on the German economy. According to De Jong, once again there is good news. “If things are better in Germany and they produce more, they will need more stuff from us,” he says. ‘So that’s fine. And let’s not forget that lower energy prices are also important for our companies.’
“If things are better in Germany and they produce more, they will need more stuff from us”
But, he warns, falling energy prices weigh most heavily in Germany. This is due to the fact that German industry plays a bigger role in the economy than in the Netherlands. The Germans also have a relatively more energy-intensive industry, which has therefore had to deal with reduced production for a long time due to high energy prices. “But as prices have fallen sharply again, there is already a noticeable recovery in production in energy-intensive sectors,” De Jong continues. “With us it’s a little less, but it will come.”
Escaping the recession
According to De Jong, this means that Germany is also (for the time being) escaping a recession. Although the German economy contracted in the fourth quarter of 2022, economic institutes expect the German economy to have grown by a tenth of a percentage point. “So if you define a recession as two consecutive contracting quarters, then they’re really running away for now.”
However, this does not mean that the danger has completely passed for Germany, warns De Jong. On the contrary. “Now we have seen that OPEC will limit oil production, so oil prices are higher again,” he sums up. “Also, we are dealing with interest rate hikes that have not yet fully affected the economy. There is turmoil in the financial system, so there are still negative factors that could push the German economy into a recession.”
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
