The German government expects an economic recovery driven by intense energy

The German Ministry of Economy sees “signs of slight economic recovery” in the country, as energy-intensive industries have increased their production since the beginning of the year. Economy Minister Robert Habeck said: “The cost of electricity and gas now on the wholesale market is about the same as it was before the energy price crisis, so inflation continues to fall.” The government official added, “This increases the purchasing power of citizens and supports the recovery of private consumption.”

The government slightly revised its economic growth forecast for 2024, from 0.2% in the February report to 0.3%, and expects 1% growth next year. “Of course, 0.3% is not something we can be satisfied with,” Habeck explained. “Despite signs of hope, I remain concerned about the structural problems that Germany suffers from as an economic location,” the person in charge of the economy stressed, calling for promoting innovation, reducing bureaucracy and resolving the labor shortage.

A series of notable negative events, such as the Covid-19 pandemic and the energy crisis exacerbated by the war in Ukraine, have slowed economic growth in Germany.

Record energy prices, especially natural gas, have had an impact on the economy as a whole, with energy-intensive industry continuing to play a major role. Globally, since their peak in 2022, prices have fallen almost to the pre-crisis level. However, fossil gas remains more expensive than before the crisis, when Russia supplied the majority of the country's gas demand.

Chancellor Olaf Scholz recently defended his government's efforts to overcome the energy crisis, in the face of criticism from sector leaders. Schulz stated that energy prices returned to pre-crisis levels, after “two years of change,” as the country transformed the structure of its energy imports, especially with regard to natural gas. The advisor stated that this change contributed to the country becoming competitive in terms of energy prices as it had been “for decades.”