The good news first: The German economy has survived the loss of its largest energy supplier without a major crash. The Russian war of aggression with all its consequences has made Germany poorer. On the anniversary of the beginning of the war, however, it can be summarized: The loss consists primarily of lost additional growth and higher consumer prices, which mainly affect the poorer. However, the substance of the German economy has not yet been attacked.

Even the weaker figures announced by the Federal Statistical Office on Friday do not change this: In the last quarter of 2022, gross domestic product shrank by 0.4 percent compared to the previous quarter, resulting in GDP growth of 1.8 percent for the year as a whole. Thus, the hoped-for Corona recovery has failed to materialize – but so has a deep recession.

There has been much speculation about the looming recession in recent months. Today, it can be said that it will most likely occur in a milder form, but it will be an unusual recession. One could also say: "This time is different".

What is a technical recession?

To explain: Economists speak of a "technical recession" when economic output shrinks for two quarters in a row. This is likely to be the case in the spring, as high prices weaken private consumption and many investments are being reconsidered due to high interest rates.

What is meant by the "recession" is actually a real cooling of the economy, in which factories are underutilized, employees are sent home, goods no longer find buyers, prices stagnate or fall and unemployment begins to rise. All this does not fit in with the current phenomena of the shortage of skilled workers, high inflation and the order backlog in industry, as they can be observed in Germany.

That's not to say it's easy to get out of this "stagflation." Rather, it means that conventional means of fighting recession – for example, stronger government demand – are of little or no use at the moment. The key to the return of growth is more moderate inflation, coupled with functioning supply chains and reliable economic policies that do not make life unnecessarily difficult for companies. In these exceptionally difficult times, pragmatism is needed. The anniversary of the Russian attack may also be an occasion to reflect on this.