BERLIN, March 15 (Reuters) – The German economy will not escape a recession in 2023, but after two quarterly slumps in winter it will start to recover in the spring, according to the economic institute Ifo.
According to Ifo forecasts published on Wednesday, gross domestic product (GDP) is expected to shrink by 0.2% in the first quarter. The economy shrank by 0.4% in the fourth quarter of 2022 compared to the previous three months.
A recession is usually defined as two consecutive quarters of contraction.
The institute forecasts that economic output in 2023 will remain roughly at the level of the previous year with a minus of 0.1%.
Inflation will take its toll on consumer-related sectors, which will slow growth, but on the other hand, industrial activity will support the economy, Ifo said.
“From the middle of the year at the latest, rising real wages will support the domestic economy,” said Ifo economic researcher Timo Wollmershäuser. Real wage growth will be supported by noticeable wage increases and gradually falling inflation rates.
last update
Watch 2 more stories
According to the economist, inflation is expected to fall to 6.2% in 2023 and to 2.2% in 2024.
Falling energy prices and an easing of supply chain bottlenecks are the reasons for the gradual decline, Ifo said.
According to the institute, the German economy is expected to grow strongly by 1.7% in 2024.
Reporting by Rene Wagner and Maria Martinez Editing by Miranda Murray
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.