The outlook for the German economy improved slightly after energy prices eased.
Economic output should fall “slightly” again during the year, but is likely to be “a little better” now than expected in late 2022.
In its December report, the bank forecast that the economy would contract by 0.53% in 2023.
Businesses and consumers around the world have rebounded slightly. Recession fears have eased somewhat. The apparent easing of Europe’s energy crisis must have helped. Inflationary pressures have also eased somewhat.
This year, the Bundesbank said it expects lower energy prices to further reduce inflation, while falling producer prices for intermediate goods at manufacturing firms may also curb commodity price inflation. cousins.
The forecast is more pessimistic than last week from the EC, which predicted that Germany would grow by 0.25% in 2023.
Confidence in the economy of Europe’s largest country recently improved from historically low readings. This is because the winter weather was unusually warm and there was a lot of fuel in storage.
Inflation is still a problem
Despite the recent declines in energy costs, the underlying pressures should ease and then rise.
The EU economy will not have a serious recession in 2023, when inflation subsides and gas prices fall. This will make the economy better than expected.
The report offers good news in the midst of a still very uncertain and complex panorama. This is mainly because of how Russia invaded the Ukraine. The invasion is approaching its first anniversary.
However, the EC can project that the EU will see a growth rate of 0.84% in 2023, above the previous forecast of 0.35%.
Meanwhile, the Eurozone will expand by 0.92%, compared to the 0.33% estimated in autumn.
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