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© Reuters. German Chancellor Olaf Scholz gives a statement to the media, while standing with Foreign Minister Annalena Baerbock, on the day of their visit to the Federal Office of Foreign Affairs to learn about the processing of visa applications in Brandenburg an d BERLIN (Reuters) -German Chancellor Olaf Scholz said on Tuesday he was convinced Europe’s largest economy would not fall into a recession despite soaring energy and food prices in the wake of Russia’s invasion of Ukraine.

German economic output stagnated in the final quarter of 2022 but grew 1.9% over the full year, data showed last week, coming in slightly higher than expectations.

“I’m absolutely convinced that this will not happen that we are going into a recession,” he said in an interview with Bloomberg TV. “We showed that we are able to react to a very difficult situation.”

Scholz also said he was optimistic Berlin could reach an agreement with Washington to avoid a trade war over new U.S. green subsidies.

“We are now discussing with the government and with all the political people in the United States that it should not happen that local content regulations are against European partners,” he said. “And I’m quite optimistic that we will reach an agreement in this field.”