According to Germany’s central bank, the country’s economic outlook is improving thanks to a decline in energy prices and a rebound in the global economy. In its latest monthly report, the Bundesbank claimed that, despite persistent high inflationary pressures, the economic prospects for Germany were “somewhat brighter”.
The bank forecasts that the end of China’s zero-COVID policy will pave the way for a global economic recovery. The Bundesbank states that the global economy saw only moderate growth in the final quarter of 2022 due to various headwinds, including high inflation rates, tightening monetary policies in many industrial countries, and the European energy crisis caused by Russia’s war on Ukraine.
The central bank also notes that employment increased in the fourth quarter of 2022, despite a contraction in GDP. The Bundesbank is encouraged by robust labour market developments, which were anticipated despite the recessionary outlook and the sharp increase in the minimum wage. It further stated that the short-term outlook is currently more favorable than it was just a few months ago.
Germany’s economy contracted by 0.2% in the final quarter of last year, which was a smaller drop than expected. The Bundesbank sees this as “milder than anticipated” due to the easing of supply chain issues and the drop in European energy prices. The Bundesbank believes that the outlook for Germany is positive despite the persisting high inflationary pressures and is likely to lead to an improvement in economic conditions in the country.
Overall, the Bundesbank’s report on the German economy suggests that the outlook for the country is relatively optimistic, despite the global economic headwinds. It anticipates that the end of the zero-COVID policy in China will further boost the global economic recovery, while the easing of energy prices and labour market resilience will underpin the German economy.
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