Germany Forecasts Economic Contraction This Year

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Germany Forecasts Economic Contraction This Year

Germany Forecasts 0.3% Economic Contraction This Year

According to media reports, the German government is planning to lower the forecast for economic growth in 2023. As per the details, Germany is expecting the economy to contract by -0.3%, which means no growth will be seen this year.

Normally, economic growth is an inaction that the economy has grown during the year. However, contraction is an indication of a shrinking economy & thus is not considered good at all.

A few months ago, Germany had forecasted a 0.4% economic growth in 2023, which will now be changed with a contraction.

German Economy Faces Major Headwinds

During Q3 2023, the German economy is also at a very high risk of shrinking, while Q4 2023 will lead to slight growth. However, the news is still not official unless it is announced by the economic minister of the country.

Next month, Germany's minister for economy will publish the official forecasts for the recent and the upcoming quarters. According to an insider, the officials are still preparing the projections for the autumn & will be sent to the relevant authorities on 11th October.

According to the economy minister of Germany, the economy will remain weak during Q3 2023. They added the economy will only pick up pace once we reach the end of the year or start of the year 2024.

Just like the rest of the European countries, the interest rate is also high in Germany. In addition, the country's manufacturing sector is also facing increased pressure due to a slowdown in global demand and high inflation (local & international).

A few days ago, the European Commission also issued a new forecast about Germany's economy. According to them, the economy will shrink by 0.4% in 2023, while the earlier forecast was for a growth of 0.2%.

According to various economic institutes, the German economy will likely contract by 0.4% in 2023 rather than any meaningful growth. Given the sheer size of Germany in the EU's GDP, it will be a big blow for the entire Europe.

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