The signs of a recession in Germany, Europe’s largest economy, are becoming clearer. The Bundesbank reports this in its monthly report. The shutdown of Russian gas supplies to Germany will lead to rising energy prices and increased uncertainty among companies and households in the country, according to Germany’s central bank.
“There are increasing signs of recession in the German economy, in the sense of a clear, broad and sustained decline in economic output,” the Bundesbank said. While gas supplies are likely to prevent gas rationing in Germany from being formally official this winter, economic output will decline “slightly” in the third quarter, according to the central bank.
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According to the Bundesbank, there will be a ‘real contraction’ in the fourth and first quarters of next year. The central bank did indicate that the outlook remains ‘very’ uncertain. Inflation is also expected to pick up further in the coming months. Bundesbank president Joachim Nagel warned in August that Germany, like the Netherlands, may face inflation of more than 10 percent.
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