Germany’s finance minister predicts a “very light” recession this year.

by Mapping Returns

The country of Germany will likely endure a minor recession in 2023, according to German Finance Minister Christian Lindner, who expressed optimism about the prognosis for his nation’s economy on Tuesday.

In an interview with CNBC’s Geoff Cutmore at the World Economic Forum in Davos, Lindner said, “We still have to deal with considerable uncertainty, but I think the economic picture is improving.

He continued by saying that compared to a few months ago, he felt more optimistic about 2023 and 2024.

According to Lindner, “there is a chance to witness speedier economic recovery and faster drop in inflation rates than projected.”

The nation’s inflation rate for December turned out to be lower than forecast, falling to 9.6% earlier this month.

Although Lindner predicted a “very minor” recession, he also expressed confidence in the German economy’s resiliency. He clarified that this applied to both medium-sized businesses and its larger industries.

In response to strains that Europe’s economies have been under since the start of the Ukraine conflict, the finance minister remarked, “The German economy has been able to reduce the gas usage by more than 20% without affecting the production thus this indicates we are resilient.”

He claimed that in order to make its economy more competitive, the German government was now concentrating on this.

In addition, Lindner discussed the Inflation Reduction Act of the American administration, about which he expressed some reservations.

“Trade diplomacy is what is required; we do not need a trade war or a struggle between the European Union and the United States over who can afford to provide greater subsidies. The United States and the European Union will be the two losers, according to Lindner.

He acknowledged that he recognised the U.S. government’s emphasis on a green transition and its relationship with China, but he added that it was important to minimise any “unfavourable side effects on the European Union and our bilateral trade relationship.”

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