German Finance Minister Christian Lindner said Tuesday that he believed the country would experience a mild recession in 2023, but that he felt positive about his country’s economic outlook.
“We still have to cope with high uncertainty, but I think the economic outlook is improving,” Lindner told CNBC’s Geoff Cutmore in an interview in Davos at the World Economic Forum.
He added that he felt more positive about 2023 and 2024 than just a few months ago.
“There is an opportunity to see faster economic recovery and faster decline in inflation rates than expected,” Lindner said.
Earlier this month, the country’s inflation reading for December came back lower than expected as it declined to 9.6%.
Lindner said he expected a “very mild” recession, but also believed the Germany economy was resilient. This included its broader industry as well as medium-sized companies, he explained.
“The German economy has been able to reduce the gas consumption by more than 20% without reducing the production so this shows we are resilient,” the finance minister said, addressing pressures that Europe’s economies have been facing since the outbreak of the Ukraine crisis.
He said the German government was now focused on “strengthening the competitiveness” of its economy.
IRA concerns
Lindner also addressed the U.S. administration’s Inflation Reduction Act, which he said he had some concerns about.
“We need trade diplomacy and not any kind of trade war or a competition between the United States and European Union who can afford to pay more subsidies. There will the two losers, the U.S. and the European Union,” Lindner said.
While he said he understood the U.S. government’s focus areas of a green transition and its relationship with China, he also believes the “negative side effects on the European Union and our bilateral trade relationship” must be minimized.
Source link: https://www.cnbc.com/2023/01/17/german-finance-minister-country-will-likely-face-very-mild-recession.html