Germany is already in recession, economists say

Germany is already in recession, economists say
Germany is already in recession, economists say

The German economy is on track for three quarters of negative growth, meaning it meets the official criteria for a recession, a Reuters poll of 34 economists showed.

Europe’s largest economy is one of the most vulnerable to falling energy supplies and rising costs, the agency said, as its industries depend heavily on Russian natural gas.

Read also: Europe Heading For Recession – How Bad Will It Be?

The survey conducted between August 29 and September 1 predicts three consecutive negative quarters starting with the current one.

The definition of technical recession requires only two.

According to the median estimate of economists surveyed, the German economy will contract by 0.1% in the third quarter of 2022, 0.3% in the fourth and 0.2% in the first quarter of 2023.

A dramatic change from July forecasts of marginal growth of 0.2%, 0.3% and 0.4%.

Another interest rate hike is expected from the ECB in early September (Reuters)

A return to growth is forecast later in 2023 with 0.4% in the second quarter, 0.6% in the third and 0.5% in the third.

According to the median estimate, for the whole of 2022 growth will hover around 1.5%, before slowing to 0.1% this year.

“Unavoidable”

“Gas prices are rising from one astronomically high price to the next and will lead to unprecedented energy bills this winter,” commented ING’s Karsten Brzeski.

“Even if the flow of Russian gas does not stop completely, high energy and food prices will weigh heavily on consumers and industry, making a technical recession – to say the least – inevitable,” he warned.

The energy crisis has caused a 400% increase in wholesale natural gas prices this year, a rise that has hit energy-intensive industries such as steel and fertilizer production hard.

With energy prices soaring and inflation hitting 8.8% in August, the highest level in nearly half a century, pressure is mounting for more rate hikes from the European Central Bank.

In the latest Reuters poll, some economists are predicting a 50 basis point rate hike at the ECB’s Sept. 8 meeting, while others are pushing the figure to 75 basis points. However, the price tag now appears to be tipping in the direction of a very large increase.

In the emerging situation, Germany is not the only country concerned. Swollen energy bills and a drought in Europe are exacerbating the eurozone’s cost-of-living crisis, portending a painful recession this coming winter, Reuters concludes.


The article is in Greek

Tags: Germany recession economists

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