The economy will likely come away with a black eye in 2023

Berlin, 02 January – Despite the lingering risk of inflation and the massive corona wave in China, Germany is unlikely to face a deep economic recession in the new year. The Bundesbank sees it that way, as does the wise Ulrike Malmendier. The chief economist expects two consecutive quarters of contraction in economic output: “But now I am optimistic enough to say: we are not experiencing a mega-recession and certainly not a deindustrialisation of Germany”, has she added in an interview with “Handelsblatt” on Monday. Bundesbank boss Joachim Nagel also assumes that Germany will come out of this with a slight slowdown.

“And I am confident that we will get the high inflation rate under control over the medium term. The Governing Council is very aware of its responsibility,” Nagel said in an interview with the “Journal for the entire banking system” (ZfgK). The statistics office Eurostat presented the consumer price data on Friday. in the euro zone in December. Experts polled by Reuters expect inflation to fall to 9.7% from 10.1% in November.

Even if the price increase is no longer in the double-digit percentage range, the European Central Bank has not yet given the green light. After the last increase of half a percentage point, the deposit rate that financial institutions receive from the central bank for parking excess funds is 2.00%. ECB President Christine Lagarde said interest rates should continue to rise at a pace of 0.50 percentage points for some time to ease inflationary pressures.

According to Malmendier, high energy prices are a huge burden on the economy: “But companies are also extremely adaptable. Prices are coming back down.” At the same time, she has another concern: “The situation in China worries me,” said the economics professor at the American University of Berkeley, who was a member of the German Council of Experts economic.(SVR) is.

“CAST COURSE ON PROTECTION IN CHINA”

In view of the corona wave in the People’s Republic after the abrupt exit from the strict zero-Covid course and the resulting economic consequences, Germany must draw up an emergency plan: “If Chinese ports and factories are closed because almost all employees are sick, will have dramatic economic consequences, ”warned the economist. According to them, supply chains would then collapse again and thus drive up the prices of raw materials and intermediate products enormously. “I really hope that the federal government already develops contingency plans for this matter.” Germany needs a “crash course in protecting China”.

Chinese head of state Xi Jinping remarked that his zero Covid policy has failed: “Now the pendulum is swinging to the other side: Beijing is apparently pursuing a one hundred percent Covid policy instead of a zero Covid policy. zero Covid. But if the easing in China goes too far, the number of infections will explode,” warned the member of the expert panel who advises the federal government on economic issues. Millions of deaths are already feared. Because the People’s Republic does not have a vaccine that works.

Since there is one in Europe, Malmendier believes that it would be good for China to authorize and buy it in order to protect its population: “At the same time, it would be extremely important for the economy, both in China and for us and other business partners. »

Economy will likely come away with a black eye in 2023 – ‘No mega recession’

Source: Reuters

Symbolic photo: installment purchase image on Pixabay

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