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Germany's economy grew by 1.9% in 2022, latest data shows

January 13, 2023

Germany managed to stave off a full recession in 2022, with the economy performing better than expected. Although Russia's war in Ukraine and high energy prices slowed growth, the economy "managed to perform well."

Pedestrians walking past a shopping center in Berlin
Germany's economy has fared better than initially fearedImage: Stefan Zeitz/Xinhua/picture alliance

Germany saw its annual growth dip slightly in 2022, according to data published by the federal statistics agency Destatis on Friday. However, even accouting for unusually high inflation in the region of 10% in the peak months of 2022, economic output grew. 

The rate of growth in 2022, measured in gross domestic product (GDP), reached 1.9%, down from the 2.6% recorded in 2021.

However, the worst fears of a painful recession have been tempered by a slight, but unexpected, growth of 0.4% in the third quarter of 2022. Figures on the development for Germany's GDP in the last quarter of the year will be published later this month.

High energy prices have been blamed for the weak performance with the Russian invasion of Ukraine seen as one of the main underlying factors.

"Price-adjusted GDP in 2022 grew by 1.9%," Destatis wrote on Twitter. "Despite the war in Ukraine and the energy crisis, the German economy saw further recovery in the third year of the coronavirus pandemic."

Better performance than expected

"In 2022, the overall economic situation in Germany was affected by the consequences of the war in Ukraine and the extremely high energy price increases," said Destatis president Ruth Brand at a press conference on Friday.

"Although these difficult conditions persist, the German economy as a whole managed to perform well in 2022," she added.

The government in Berlin had forecast in October that GDP would shrink to a meager 0.4% for the whole year.

This came amid soaring inflation and a desperate scramble to secure energy supplies as Germany weaned itself off Russian fossil fuels.

But the surprisingly successful efforts to stock gas, paired with an unusually warm winter period, and a substantial €200 billion ($216 billion) support package have softened the blow.

A crisis of commodities and supply chains

Consumer-fueled growth

Inflation in Germany also came down slightly in December, sparking hopes that the runaway surge in living costs that dominated much of 2022 may be coming back under control.

"The German economy was or is more resilient than was maybe feared in the autumn," Jan-Christopher Scherer, economist at the DIW think tank in Berlin, told AFP news agency.

"There will not be a deep recession," he added.

Last year was marked by the lifting of almost all coronavirus restrictions, which saw an increase in consumer spending despite rising inflation. 

"On the demand side, it was mostly household final consumption expenditure which accounted for the growth of the German economy in 2022," Destatis said in its report.

The growth rate of 1.9% — slightly higher than the 1.8% predicted by experts — was also higher than the average of just 1.0% in the ten years between 2011 and 2021.

ab/rs (AFP, Reuters)