Bundesbank: No recovery yet in German economy in recession

“Germany’s economic output will likely remain largely unchanged in the third quarter,” the Bundesbank’s August report on the economy said.

The German Central Bank (Bundesbank) reported that the country’s economy growth is expected to remain flat in the third quarter, possibly due to weak demand from abroad and rising financing costs.

The August report of the Bundesbank on the economy has been published.

In the report, it was stated that the leading forecasts indicated that the German economy recorded zero growth in the second quarter of the year, and that the outlook for the July-September period of the year was not much better.

Bundesbank stated that weak demand from abroad and rising financing costs due to interest rate hikes weighed on the economy, adding that “Germany’s economic output will probably remain largely unchanged in the third quarter.”

In the report, which includes that foreign demand for German goods has been on a downward trend recently, it was pointed out that industrial production will continue to be weak in the July-September period.

Germany’s largest trading partner, Bundesbank report ChineseIt was stated that the recovery of Turkey after the Kovid-19 epidemic “lost momentum” and it was predicted that the borrowing costs, which increased with the interest rate hikes of the European Central Bank (ECB) to reduce inflation, will continue to put pressure on the investment and construction sector in Germany.

The bank’s report stated that inflation may remain above the ECB’s 2 percent target for a long time, as price pressures ease very slowly.

ECONOMY IS IN REcession

The German economy had technically entered recession, shrinking by 0.3 percent in the first quarter of the year due to the impact of unusually high inflation and rising interest rates on consumer spending. The economy contracted 0.5 percent in the last quarter of last year.

Although the bottlenecks that emerged during the Covid-19 epidemic eased, the country’s economy is adversely affected by the stagnation in demand as a result of the rise in interest rates, the decrease in confidence in the economy and the decrease in the purchasing power of consumers in an unusually high inflation environment.

While the German government expects 0.4 percent growth in the economy this year, Germany’s leading economic think tanks expect the economy to shrink by 0.2 to 0.4 percent in 2023.

Meanwhile, Germany’s Federal Statistical Office (Destatis) will release leading GDP data for the second quarter of the year on August 25. (AA)

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