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German GDP Seen Shrinking Next Year on Soaring Energy Costs

  • Government slashes 2023 forecast and sees 0.4% contraction
  • Economy Minister Habeck warns of economic and social crisis
Commuters cross tram lines at Alexanderplatz in central Berlin, Germany.

Commuters cross tram lines at Alexanderplatz in central Berlin, Germany.

Photographer: Krisztian Bocsi/Bloomberg
Updated on

Europe’s energy crunch will likely trigger a contraction in the German economy next year for the third time since the financial crisis, according to updated government forecasts published on Wednesday.

Gross domestic product is set to shrink by 0.4% in 2023 as soaring power costs crimp industrial output and dampen consumer spending, the Economy Ministry predicted, slashing a forecast of 2.5% expansion made at the end of April. It also cut its growth projection for this year to 1.4% from 2.2%.