Bloomberg cites Deutsche Bank that the German economy is heading for a recession as a record contraction of 1% is expected in 2023 and record German inflation has yet to peak.
This is stated in a statement by analysts led by Stefan Schneider.“Bloomberg” The reduction in gas supplies from Russia and the economic downturn in the US will lead to the contraction of the German economy in the second half of the year, and record inflation in Germany has not yet reached its peak.
The report notes that the recent energy supply crisis due to the war in Ukraine has raised the level of anxiety across Europe, and in particular in Germany due to its heavy dependence on Russian gas.
The main problem is that the Kremlin may use the repair work on Nord Stream 1 as an excuse to completely cut off gas supplies to Germany.
“It seems reasonable to assume that Russia will continue to look for ways to disrupt economic activity in Europe in response to Western sanctions, financial and military support for Ukraine,” the economists note in their report.
They added that “this may not necessarily mean a total shutdown, but it does mean an impact on industrial production and it is almost certain that the state of uncertainty on the economic front will push the German economy into recession in the second half of 2022.”
Source: dpa + “Bloomberg”