Germany's central bank, Bundesbank, does not foresee a economic downturn or recession.
Despite an unexpected contraction in the economy during the spring, the Bundesbank believes Germany won't slip into a recession. The nation's GDP is projected to tick up once more in this current third quarter, although at a modest rate, as stated in the report published on Tuesday.
The Bundesbank's report states, "The anticipated gradual economic recovery is being further delayed." However, they do not foresee a recession, defined as a significant, widespread, and prolonged economic downturn, happening at this time, as long as there aren't any unforeseen negative disruptions.
Between April and June, Europe's largest economy saw a 0.1% decline quarter-on-quarter, attributed to decreased investments. After growing by 0.2% in the first three months of the year, two consecutive quarters of decline are classified as a technical recession by specialists. However, the German central bank believes this won't occur, and consumers could potentially drive the economy. "Private consumption, along with the service sector," they forecast, "is expected to increase" in the current summer quarter. Higher disposable income and increased wage growth should boost consumer spending.
Nonetheless, the Bundesbank anticipates persistent weakness in industry - and also in the construction sector. Given the recent global slowdown in industrial growth, foreign demand might remain weak. Additionally, German industrial companies face a tough competitive environment. As a result, they predict exports and investment in equipment will fall short of expectations from the last Germany forecast. Ultimately, the Bundesbank estimates, economic growth will only expand marginally.
Despite the anticipated delay in the economic recovery, the Bundesbank maintains that a recession is unlikely in the current circumstances. The resilience of the consumer sector, with projected increases in private consumption and the service sector, could help mitigate some of the economic challenges.
