The Bundesbank warns of a recession of uncertain dimensions in Germany

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The current situation is so complex that central banks they have little visibility into how economies can behave before a possible aggravation of the energy crisis or the war in Ukraine. The Bundesbank, the German central bank, considers that the size of the recession in which the largest European economy is expected to incur between the fourth quarter of this year and the first of 2023 is “uncertain”.

The Bundesbank economists warn in the November bulletin that “insecurity about energy supply and its costs weigh heavily on companies” and, therefore, the German economy could contract significantly in the winter semester. Most companies see the prices of energy and raw materials as a risk for their businesses in the coming months.

production plans and export expectations of companies in the manufacturing sector in the short term are “pessimistic”, according to the Bundesbank. “The weakening of the global conjuncture could affect exports, even as high order intake and the reduction of bottlenecks in industry supplies soften demand,” say the Bundesbank economists in the monthly report. In addition, they recall that high inflation reduces private consumption and the demand for consumer services.

For this reason, the Bundesbank forecasts a recession in the German economy in the last quarter of 2022 and the first quarter of 2023, despite the fact that growth in the third quarter of this year has been higher than expected, 0.3% compared to the previous quarter. previous quarter. They say that this recession has an “uncertain” dimension. A gas shortage situation can probably be avoided, but the condition is that enough gas is saved, something that depends on the temperature in the case of homes. If there is a gas shortage, the contraction of German GDP will be greater, according to the Bundesbank.

Source: lainformacion.com

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