Bundesbank: German economy could contract by more than 0.3% by the end of 2023
By the end of 2023, the eurozone’s largest economy could shrink by more than 0.3 percent compared to last year’s figure. The possible strengthening of the recession may be influenced, among other things, by the continued high inflation in Germany, reports Reuters with reference to the updated forecast of the Bundesbank.
Due to the negative effects of high inflation, the purchasing power of citizens continues to decline, said the president of the regulator, Joachim Nagel. The deterioration in the indicator led to a revision of the organization’s June forecast, which implied a decline in GDP by 0.3 percent by the end of December. “The economic recovery in the rest of the year may turn out to be somewhat more timid than expected in June forecasts,” the Bundesbank concluded.
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However, in the next few years, the situation will begin to change for the better. Germany’s GDP is expected to grow by 1.2 percent in 2024, and by 1.3 percent in 2025. Several key factors will boost economic growth, including strong wage growth, stronger local labor market resilience, and a stronger euro that will benefit leading local experts.
Earlier it was reported that according to the results of May 2023, the German manufacturing industry was in a difficult situation. Production volumes in this sector decreased by 0.2 percent compared to April, and increased by only the same amount in the spring. A decline was also recorded in other energy-intensive industries against the backdrop of lower domestic and foreign demand.
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