The German government expects GDP to eventually grow 0.2% this year, dodging the -0.4% recession forecast in October, people familiar with the new forecasts due to be published on Wednesday have said.
However, the German Executive has lowered its growth expectations for 2024 to 1.8% from the 2.3% initially projected, according to sources who prefer to remain anonymous.
German Chancellor himself, Olaf Scholz, told Bloomberg last week that he was confident the country would escape the threat of recession this year despite rising energy costs due to the war in Ukraine.
Scholz pointed out that the diversification of the gas supply has been crucial for the recovery of activity. In fact, the Federal Statistical Office has revealed that the German economy likely stalled in the fourth quarter of 2022 and avoided contracting as expected.
This Tuesday, S&P Global has revealed that the German composite PMI showed a minimal drop in total activity, as it increased from 49.0 in December to 49.7 in January, its highest since July 2022, the result of a revitalization of the service sector. However, manufacturing production continued to decline.