The Bundesbank forecasts a recession in the German economy in the winter due to a shortage of energy supply caused by Russia’s war against Ukraine.
In the September bulletin, published on Monday, economists at the German Central Bank see increasing signs that the German economy will enter a recession, which they see as “a sharp, large and lasting drop in economic output.”
Therefore, they expect Germany’s real Gross Domestic Product (GDP) to decline slightly in the third quarter and sharply in the winter half, which corresponds to the fourth quarter of 2022 and the first quarter of 2023.
The reason, add economists from the Bundesbank, is mainly “the tense energy supply situation due to Russia’s war against Ukraine.”
High inflation and uncertainty about energy supply and its costs harm not only the gas- and electricity-intensive industry and its exports and investments, but also private consumption and the services that depend on it,” the Bundesbank economists add. .
They also predict that tensions in gas supply will continue in the coming months.
Until now, Germany has been able to avoid gas rationing thanks to increased supplies from other countries and advances in energy saving and storage.
But a significantly larger reduction in gas consumption is needed, especially by households, Bundesbank economists warn. At the same time, they forecast double-digit inflation of 10% or more in the coming months in Germany.
For now, the country has contained the rise in consumer prices, which was 8.8% in August, with subsidies for public transport and fuel, which no longer apply as of September 1.
Therefore, inflation will increase further in the coming months, as the new support measures announced by the German government will have an effect on consumer prices at the beginning of next year.
Source: Observadora
