According to the Bundesbank, the German economy got off to a weak start in the new year. “Economic output in the first quarter of 2023 is likely to be lower again than in the previous quarter,” writes the central bank in its monthly report for February, which was published on Monday. This would have slipped Germany into the winter recession: if the gross domestic product (GDP) falls two quarters in a row, economists speak of a so-called technical recession.
The Bundesbank’s economists state that the tension in the energy markets and the associated uncertainty have eased significantly. For example, the government electricity and gas price brakes mitigate the increase in energy costs for private households and companies. Investment and industrial production should benefit from this.
“On the other hand, after the significant decline in December 2022, industrial production started into 2023 from a depressed level,” explained the Bundesbank. “This also applies to exports, which are also being dampened by falling foreign demand.” Private consumption continues to suffer from persistently high inflation, which is reducing the purchasing power of private households. The construction industry is expected to cool down further.
“Things could slowly pick up again over the course of the year,” forecasts the Bundesbank. “But there is still no sign of any significant improvement.” All in all, according to the Bundesbank’s current estimate, German economic output should “decrease slightly” on average in but did a little better than expected in December.In December, the Bundesbank had predicted a GDP decline of 0.5 percent for 2023. (dpa)