German manufacturers have a large backlog of orders after the bottlenecks that emerged during the Covid epidemic have disappeared, and the service sector has also improved with improved consumer demand.
Ralf Solvin, economist at Commerzbank, said that “rapid increases in interest rates around the world seem to be affecting demand for German industrial goods,” adding that production will suffer as demand for goods shrinks.
“What we’re seeing is contrary to expectations of the economic recovery that has begun to appear in many forecasts in the second half of the year,” he said in a note to clients, Ralph said. “What we’re actually seeing is the opposite, recession risks are on the rise.”
Germany avoided a recession over the winter, although flat output in the first quarter disappointed economists who had expected a recovery.
Yesterday, European Central Bank President Christine Lagarde said that “the outlook is getting worse” for manufacturers in the eurozone.
This is in line with surveys by S&P Global, which showed activity in Germany’s service industry accelerating, while factories slowed amid slumping demand.
BMW, in turn, warned that global economic prospects are still uncertain and tense, to repeat these concerns with other manufacturers, such as Volkswagen and Mercedes-Benz.
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