Shortly after Christmas, there are increasing signs that the Germans, plagued by 2022, can look forward to 2023: ten things should get better.
According to data from the Allensbach Institute for Demoscopy from December, Germans are pessimistic about the future: almost three out of four people in the Federal Republic are worried about the situation in the country, two out of three say that inflation is affecting them severely or very severely, significantly fewer people than others rated 2022 as a “good year”. Sentiment has brightened slightly compared to its October low. Historically, however, it remains bad.
For 2023, most of those surveyed expect prices to continue rising and a financially difficult time. Shortly after Christmas, however, the world is giving Germans ten reasons to be hopeful about the coming year.
There are increasing signs that inflation, the main cause of concern for many Germans, has peaked. Leading indicators such as producer prices are falling, the Ifo Institute assumes in its latest forecast that inflation will fall by six percent, as does the Leibniz Institute for Economic Research in Halle (IWH). Some economists expect even less inflation: Former IMF chief economist Olivier Blanchard recently predicted inflation of between 2.5 and 3 percent for Germany in 2023.
Wherever inflation may end up: Whoever suffered from price increases in 2022 – and according to the Ifo data that was practically all Germans – can hope for fewer additional burdens in 2023.
In 2022, observers repeatedly warned of de-industrialization, and analysts predicted a sharp decline in economic output. These forecasts are now brightening up significantly. According to the latest forecast by the Ifo Institute, the German economy will shrink by just 0.1 percent in the coming year. “After that, things will pick up again,” says Timo Wollmershäuser, head of economic research. The IWH even predicts an unchanged economy of 0.0 percent growth for 2023 and an upswing of 1.9 percent for 2024.
The economic hopes improve the job market forecasts: The IWH sees the unemployment rate in 2023 below the value of 2021; 2024 even slightly lower. Anyone who was concerned about their job and prosperity in view of the gloomy economic forecasts in mid-2022 can take a deep breath: The Federal Republic seems to be weathering the twin crises of the corona pandemic and the Ukraine war better than assumed for a long time.
According to the Ifo forecast, incomes in Germany will again rise faster than inflation in the second half of next year. People can afford more, and private consumption is picking up speed, says Wollmershäuser, head of economic research. Those who canceled their vacation in 2022 due to the need to save can probably afford the trip south in 2023.
The price brakes for electricity, gas and heat, which will apply retrospectively from March 2023 to January, will help with this relief. Gas customers then pay a maximum of 12 cents per kilowatt hour for 80 percent of their previous consumption, electricity customers 40 cents per kilowatt hour. According to the IWH, inflation should be around three percent lower with price brakes in the coming year than without. Anyone who is currently groaning under the burden of expensive energy can look forward to support in 2023.
The 49-euro ticket for nationwide local transport also relieves many Germans. When it starts is unclear. The date will probably fall in spring 2023, when millions of commuters will travel to work much cheaper than before.
Since the European Central Bank (ECB) abandoned its zero-interest policy, the yields on overnight and time deposit accounts have been increasing. The ECB has announced further rate hikes for 2023. Anyone who has saved money can invest it safely and profitably in the coming year for the first time in a long time.
Since China ended its strict zero-Covid policy, lockdowns in cities with over a million inhabitants, closed ports and closed factories in the important sales and trading market of many German companies are a thing of the past. Previously severed supply chains are likely to increasingly close in 2023, slowing inflation in Germany and shortening delivery times for essential products like cars.
The fact that German companies are selling more again thanks to the reopening of shops in China also secures jobs in this country. Good news for all employees, car buyers and others affected by the zero Covid policy.
Rising incomes, less inflation and the end of the lockdown in China – a lot should improve for German companies in the coming year. If this supports share prices, which most analysts currently consider likely, investors can hope for gains on the markets again after a mixed stock market year in 2022.
Anyone who has children will receive more money from the state in 2023: child benefit will increase to 250 euros per month for the first three children. This corresponds to an increase of 31 euros for the first two children and 25 euros for the third child. From the fourth child, the amount remains unchanged at 250 euros.
It is certain that pensions will increase in the coming year. It is still unclear by how much. Current forecasts promise seniors significantly more disposable income from July with an increase of 3.5 percent in western Germany and 4.2 percent in eastern Germany.
E-car drivers at charging stations are currently torturing themselves with many different systems, providers and payment methods. That will change in July 2023: then charging stations will also have to accept payments by EC and credit cards. A clear simplification for everyone who is currently tearing their hair out in search of the next suitable charging point.
Another positive aspect of 2023 is that Germans apparently value peace, freedom and prosperity more and take it less for granted. The Allensbach Institute asked participants in a survey to choose from a series of statements those with which they agreed. The majority also endorsed the sentences “The good thing about the current crises is that we in Germany have once again been shown that freedom and prosperity cannot be taken for granted” and “One must be grateful that we in Germany are able to do this despite the crises no matter how good it goes”.
Even if the Germans cannot translate this awareness directly into financial and economic success, the country should be better able to master future challenges as long as it meets its prosperity with a little humility and gratitude.