Bundesbank: The recession in the German economy will end in the second quarter

The Central Bank of Germany (Bundesbank) reported that the recession in the country’s economy is expected to end with slight growth that it will experience in the April-June period.

The Bundesbank’s June report on the economy has been released.

Recalling that the German economy entered a technical recession by contracting successively in the last quarter of last year and in the first quarter of this year, it was claimed that this was caused by high inflation, which suppressed the economy by reducing the willingness to spend of households, and weak external demand and weakness in industry.

In the Bundesbank report, it was noted that supply bottlenecks, which had been a problem for a long time, have been reduced, the companies’ order books remain high and the fall in energy prices supports the recovery of the economy. It was said.

THE RESSION IS EXPECTED TO END

In the report, which includes the increase in employment and the recovery of public spending, which has been quite weak lately, it was indicated that the recession is expected to end with a slight increase in gross domestic product in the April period.

The Bundesbank report also included a prediction that foreign demand in the industry would continue to fall and this would put pressure on production and exports.

The German economy had technically entered a recession, contracting 0.3 percent in the first quarter of the year due to the impact of unusually high inflation and rising interest rates on consumer spending. The country’s economy contracted 0.5 percent in the last quarter of last year.

Although the bottlenecks that arose during the Covid-19 epidemic have eased, the country’s economy is negatively affected by the stagnation of domestic demand due to the rise in interest rates, the decrease in confidence in the economy and the the decrease in the purchasing power of consumers in an environment of high inflation.

In its semi-annual report released June 16, the Bundesbank predicted the country’s economy will contract 0.3 percent this year and inflation will remain above target until 2025. The bank expects the economy to grow by 1.2 percent in 2024 and 1.3 percent in 2025.