According to a study recently published by the German Institute for the World Economy (IfW), the German government's financial aid to the country's economy and society will increase to a record level this year, mainly due to the energy crisis.
According to the study, in 2023, Germany's state subsidies for the economy and society could reach 208 billion euros ($220.96 billion), much higher than the 98 billion euros last year and 77 billion euros in 2021.
Given the scale and magnitude of the energy crisis for the German economy, increased financial support was understandable and predictable, said Claus-Friedric Laaser of the IfW institute. But the huge amount of aid is far beyond what was previously known.
The largest planned subsidies, according to the researchers, are for electricity and gas subsidies from the economic stabilization fund, amounting to 43 billion euros and 40 billion euros respectively. Subsidies for the environment and energy also amount to nearly 35 billion euros, not including money from the economic stabilization fund.
The transport sector is subsidized by 26 billion euros. There are also subsidies for energy-efficient building renovations worth nearly 17 billion euros and subsidies for health insurance worth 14.5 billion euros, among others.
According to the budget plan, financial subsidies are becoming the most important expenditure item in the entire state budget. According to the researchers' calculations, for every euro the German federal government spends in 2023, more than 30 cents will be spent on financial subsidies, while social spending will be close to 30 cents, and spending on government activities or future-oriented activities such as infrastructure, research andeducation will account for less than 20 cents.
The IfW study also said that if state subsidies and tax deductions are added, Germany's total subsidies in 2023 could reach 362 billion euros, equivalent to 9.7% of GDP. For comparison, in 2022, this figure accounted for 6.5% of GDP, in 2019 it was 5.8% of GDP.
While subsidies are expected to rise, rising inflation, rising energy prices and falling production have forced the German government to lower its growth forecast for 2023.
The latest forecast from the German Economy Ministry shows that the country's economic output will shrink by 0.4%, a significant decline from the 0.4% growth forecast in April 2023, when Berlin was expected to weather the energy crisis better than expected thanks to a recovery in industry.
However, the picture has worsened in recent months, with forecasts suggesting that the German economy could once again fall into recession.
The German government's forecast is also in line with recent estimates. According to the International Monetary Fund (IMF), the country will be the worst-performing major economy in 2023, with a forecast contraction of 0.5%.
According to AFP , the German economy has faced serious impacts since the conflict broke out in Ukraine in 2022, causing inflation, especially energy costs, to increase sharply.
Energy shortages have also led to a decline in manufacturing, while the impact of high interest rates in the eurozone to curb rising consumer prices has further exacerbated the slowdown in the European Union's (EU) top economy.
In a statement, Economy Minister Robert Habeck admitted that the volatile geopolitical environment caused Germany to overcome the crisis more slowly than expected.
For 2024, Germany forecasts the economy to recover with growth of 1.3% and reach 1.5% in 2025. The Ministry of Economy expects inflation to be 6.1% in 2023, before falling to 2.6% in 2024 and further to 2% in 2025.
Minh Hoa (reported by VNA, Hanoi Moi)
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