Germany saw its annual growth fall to 1.9 percent in 2022 down from 2.6 percent in 2021, according to data published by the federal statistics agency Destatis on Friday, but the country’s performance was much better than expected.
On the other hand, the growth rate of 1.9 percent — slightly higher than the 1.8 percent predicted by experts — was also higher than the average of just 1.0 percent in the ten years between 2011 and 2021.
These figures came as the government in Berlin had forecast in October that the Gross Domestic Product (GDP) would shrink to a meager 0.4 percent for the whole year 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.
Moreover, the worst fears of a painful recession have been tempered by a slight, but unexpected, growth of 0.4 percent in the third quarter of 2022. Figures on the development for Germany’s Gross Domestic Product (GDP) in the last quarter of the year will be published later this month.
“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.
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 percent,” 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.”
Inflation down in December
Another good sign is that inflation in Germany also came down slightly in December, sparking hopes that the runaway surge in living costs that dominated much of the year 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, said. “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.