Minister Habeck: “German economy remains robust”

The Federal Cabinet today adopted the 2022 Annual Economic Report. Despite the magnitude of the current challenges, the Federal Government expects the economy to recover over the course of the year.

Federal Minister Robert Habeck said: “The impact of the coronavirus pandemic continues to be felt, and countless companies are struggling with it. In spite of this, our economy remains robust. We are expecting a growth rate of 3.6% this year. Prospects for the labour market also look quite good. At the same time, we must now make the right choices in order to leave the crisis behind fast. Investments, efficiency and speed are crucial. In order to secure continued prosperity and competitiveness, economic recovery must go hand in hand with effective climate action and sustainable progress. This transformation is a historic challenge, but also a huge opportunity. Starting from this year, we will gradually develop the social market economy into a socio-ecological market economy. We have started working on the details of this.”

According to the Federal Government, the German economy will gain pace on its path to recovery over the course of the year. For 2022, the Federal Government expects a year-on-year increase of 3.6% in price-adjusted GDP. For the first time, economic output will exceed pre-crisis levels again.

The annualised number of people in work is expected to rise by 425,000, and the pre-crisis level will be exceeded in the first half of the year. The rate of unemployment is predicted to fall further by 0.6 percentage points to 5.1% in 2022.

A broader approach to prosperity

The 2022 Annual Economic Report, which is entitled “For a Socio-ecological Market Economy – an innovative approach to transformation”, contains not just the projection of macroeconomic activity but also details of the Federal Government’s economic and fiscal priorities. As we move towards a Socio-ecological Market Economy, and with a view to a broader basis for debate about economic policy, the Annual Economic Report also contains a newly designed chapter with selected welfare and sustainability indictors in five areas: 1) growth, income and employment; 2) the environment and the climate; 3) education, research, innovation; 4) welfare, demographics, integration; 5) sustainable finances and equivalent standards of living.

Innovation as a basis for future prosperity and successful transformation

As it engages in ambitious climate action and tackles demographic change, Germany will be reliant on innovation and higher productivity in order to maintain its prosperity and quality of life. The Federal Government therefore aims to make particular use of the potential offered by digitalisation and data-based value creation. The Annual Economic Report describes the steps being taken by the Federal Government to expand digital infrastructure and to ensure a dynamic development of the data economy. In order to boost Germany’s innovative capabilities, 3.5% of GDP is to be spent on research and development in future, and the transfer of innovation into marketable products is to be facilitated.

Social cohesion fundamental to reorientation of economic policy

Climate action and digital progress mean changes. This makes it all the more important to have a welfare state which helps the citizens to grasp new opportunities in life. The Federal Government believes that the promise of social security is a central element to ensure public acceptance of the challenges presented by the transformation. The planned rise in the statutory minimum wage underlines this conviction, as do the envisaged reforms in the field of basic welfare benefits.

Selected key figures for macroeconomic trends