Overview of Germany’s Looming Recession
The German economy is facing a looming recession as a result of the energy crisis, high inflation, and shrinking global trade. The enormous increase in the prices of energy is leading to dramatic losses in purchasing power and threatens to make production unprofitable in many companies. As part of an economic conflict over the Ukraine crisis, Russia significantly decreased gas deliveries to Germany.
According to the Federal Statistical Office, the inflation rate in Germany rose to a record 7.9% in August 2022. This was fueled by soaring prices of energy products, which increased 35.6% YoY. The energy crisis is becoming the biggest problem for Germany's industry. Inventory levels of companies are rapidly declining, and companies such as restaurants that use a lot of energy are incurring costs that make them wonder whether they will be able to stay in business.
Overview of Germany’s GDP
According to GlobalData, Germany's gross domestic product (GDP) stood at EUR4,224 billion in 2021. The GDP is expected to reach EUR4,297 billion by the end of 2022. In the long-term, the GDP of Germany is projected to reach EUR4,431 billion in 2023 and EUR4,654 billion in 2024. Germany is focusing on innovation and international exports to maintain its competitiveness and global networking.
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