Sat, 28 Jan 2023

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Economic experts estimate that Europe's largest economy has lost hundreds of billions of euros due to the COVID-19 pandemic and the Russia-Ukraine conflict.

BERLIN, Jan. 25 (Xinhua) -- Despite the ongoing challenge of the energy crisis, the German government expects that a recession in 2023 will be avoided, raising its forecast for the country's gross domestic product (GDP) from minus 0.4 percent to plus 0.2 percent.

"We are now assuming that the recession will be shorter and milder, if it happens at all," Minister for Economic Affairs and Climate Action Robert Habeck told a press conference. Germany has made the crisis "manageable," he added, but it is "not over."

Economic experts estimate that Europe's largest economy has lost hundreds of billions of euros due to the COVID-19 pandemic and the Russia-Ukraine conflict.

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Over the course of three years, these dual crises will cost Germany a total of 595 billion euros (648.6 billion U.S. dollars) in added value by the end of 2023, according to calculations published by the German Economic Institute (IW) on Wednesday.

"The extraordinary situation will continue to affect us and weigh on prosperity in the coming months," IW economist Michael Groemling said.

After losing Russia as its most important energy supplier last year, Germany began to restructure its supplies. Within a few months, new supplier agreements were reached as liquefied natural gas (LNG) terminals were built in the North Sea to create the necessary infrastructure.

As a result, Norway became Germany's new top gas supplier, accounting for 33 percent of the country's total gas imports in 2022, according to the Federal Network Agency (BNetzA). Meanwhile, the share of Russian gas plummeted from more than half to 22 percent.

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Driven by soaring energy prices, inflation in Germany peaked at 10.4 percent in October, before slowing to 8.6 percent at the end of 2022, according to official figures. Inflation measures to relieve consumers, such as the energy price cap, had a downward effect on prices.

The German government now expects inflation to fall more sharply than was recently forecast. Instead of the 7 percent drop previously predicted, the annual inflation rate is forecast to fall to 6 percent this year. (1 euro = 1.09 U.S. dollar)

© Provided by Xinhua

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