The Bundesbank announced that the signs of a recession in Europe’s largest economy are increasing following a significant deterioration in supply conditions.
In particular, curtailed energy supplies as a direct result of the Russian war in Ukraine are leading to rising prices and growing uncertainty in Germany, affecting both businesses and households, the central bank said in a monthly report on Monday.
While accumulated gas stocks are expected to help avoid formal winter energy rationing, economic output is likely to contract “somewhat” in the third quarter before contracting “noticeably” in the following two quarters, the Bundesbank said.
“There are increasing signs of a recession in the German economy in the sense of a clear, broad-based and prolonged decline in economic output,” it said.
The country will likely be able to avoid the dire situation outlined in the institution’s June forecasts in a negative scenario that called for an overall contraction of 3.2 percent over the course of 2023, but the prospects are still there “extremely uncertain”.
Inflation rates are also likely to rise further in the coming months after certain government support measures to reduce fuel and public transport costs expired at the end of August. Headline inflation could even go into double digits, the Bundesbank said.
https://www.independent.ie/business/world/bundesbank-sees-signs-of-recession-in-germany-42000648.html Bundesbank sees recessionary tendencies in Germany