Lack of demand, tight monetary policy, and a prolonged energy crisis have prompted a growth downgrade in Germany, a Bloomberg poll indicates
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The German economy will remain stagnant in the second half of the year as it continues to grapple with the fallout from a winter recession, Bloomberg reported on Monday.
According to a survey conducted by the outlet in early August, economic output in Germany shrank in the second quarter and will stall in the three months through September, marking a deeper-than-expected decline.
The EU’s largest economy will be the only G7 member to face a contraction this year, the International Monetary Fund previously predicted.
The forecast for the German economy has been revised downwards with expected growth of just 0.1% in the fourth quarter, as domestic demand and the expectations of exporters have both weakened, according to Bloomberg.
German industry is struggling amid weaker demand from China, shortages of qualified workers, tighter monetary policy, and the protracted fallout from the energy crisis, the outlet noted.
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A “generally expected recovery still failed to materialize in early summer,” the German Economy Ministry warned in a separate report released on Monday.
Economic sentiment in the country has suffered due to “the still weak external demand, the continuing geopolitical uncertainties, the still high rates of price hikes, and the increasingly noticeable effects of monetary tightening,” the report said.
“Current leading indicators such as new orders and the business climate still don’t point to a sustained economic revival in Germany in the coming months,” it added.
Analysts expect the German economy to contract by 0.3% this year, cautioning it will likely only rebound by 0.8% in 2024, down from a previous prediction of 1%.
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