QIII-2022 QUARTERLY REPORT GERMANY
Economic recovery falters German industry heading for recession
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The economic recovery is faltering. The impact of the war on the economy is becoming increasingly evident. The BDI now expects GDP to grow by only 0.9 percent this year following price adjustment.
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Industry is heading for a deep recession in the next few months that will radiate across the whole economy. The only way to avoid severe disruptions to the economy is a rapid agreement at European level for immediate measures on the electricity and gas market with swift implementation in the member states, and an expansion of support programmes for enterprises.
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Private consumption was dominated by high demand for services in the first six months of the year. Steeply climbing prices are increasingly squeezing the disposable income of private households, jeopardising growth.
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The sharp price increases for fossil fuels and weak euro have substantially worsened the terms of trade. With exports only expected to rise marginally, net exports are set to pull GDP growth down by 1.4 percentage points this year.
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Industrial production is still struggling with a shortage of inputs. Although shortages and problems in the procurement of inputs and raw materials have eased somewhat, the war in Ukraine has increased uncertainty and the rapidly rising energy prices are an additional weight on production.