Sunday, August 7

German Economy Is ‘Moving Into Recession,’ Deutsche Bank Says


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Europe’s largest economy is headed for a recession and will shrink by about 1% in 2023, according to economists at Deutsche Bank.

Declining natural gas supplies, a downturn in the US and other headwinds will cause Germany to contract in the second half of this year, analysts led by Stefan Schneider said in a report to clients. They also said record inflation is yet to peak.

The latest squeeze on energy supplies as a result of the war in Ukraine has raised alarm levels across Europe, and particularly in Germany because of its strong reliance on Russian gas. A key concern is that the Kremlin may choose to use maintenance work on the Nord Stream 1 pipeline as an excuse to cut off deliveries completely.

“It seems reasonable to assume that Russia will continue to look for ways to disrupt economic activity in Europe in retaliation for Western sanctions and financial and military support for Ukraine,” the economists said. “This might not necessarily mean a complete shutoff,” but “the impact on industrial output and economic uncertainty will almost certainly push the German economy into recession in the second half of 2022.”



financialpost.com

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