Signs of recession increase in Germany: Bundesbank

Germany has entered a phase of “net, generalized and lasting decline” in its economy, the German central bank considered on Monday, noting that “signs of recession are increasing.”

This is mainly due to “general economic supply conditions – in particular, energy supply – which have deteriorated considerably as a result of Russia’s war against Ukraine,” the agency said in its monthly bulletin published on Monday.

Both the inflationwhich continues to rise -almost 8% annually in August- as the uncertainty about energy supplies and their costs will affect the “energy-producing” sectors that depend especially on gas, harming their exports and investments, “but also private consumption and energy-dependent service providers,” says the Bundesbank.

Due to the cessation of deliveries of Russian gas to Germany, on which the country depended for 55% before the war in Ukraine, the supply situation for this fossil energy “will be extremely tense in the coming months,” warns the Bundesbank.

The monetary institution forecasts that, after a modest rise of 0.1% in the second quarter of the year, German GDP will decline “appreciably in the fourth quarter” and “probably, in the first quarter of next year”.

We speak of a technical recession when there are two consecutive quarters of falling GDP.

The president of the German central bank, Joachim Nagel, advanced a similar forecast in early September, considering “possible a fall into recession at the end of the year and at the beginning of 2023”.