The Strategist

Bundesbank expects recession in Germany

08/23/2022 - 10:23

The largest economy in the eurozone is increasingly likely to experience a recession, while inflation will continue to rise and could reach a top of 10% this fall, states Bundesbank's monthly report.

Will Palmer
Will Palmer
Due to its high reliance on Russian gas supplies, German industry is the most exposed in the case of a supply interruption. The sector is already under a lot of stress as a result of the soaring energy prices, and no relief is anticipated.

Germany has already had to cut back on its use due to high prices and shortages, and energy-intensive businesses like metallurgy and fertilizer manufacturing have been severely impacted.

Energy prices are also pushing inflation up, which will likely peak no earlier than in the fall and be about five times higher than the ECB's goal rate of 2%.