Germany Economic Forecast

Germany Economic Outlook

May 3, 2022

Economic growth in the first quarter surprised on the upside, avoiding a recession in spite of the war in Ukraine. A detailed breakdown of national accounts data is not yet available, but fixed investment is likely to have been the driver of growth. The external sector is expected to have dragged on the overall reading. Turning to the current quarter, the war will likely dent economic activity. Business sentiment tanked in March and remained downbeat through April; the military conflict exacerbates already existing supply chain issues and has sent commodity prices skyrocketing. Meanwhile, the improvement of business conditions in the private sector slowed in April. Furthermore, consumer sentiment deteriorated in the same month and reached a historic low in May, as the war and the subsequent jump in energy prices weigh heavily on consumers’ minds.

Germany Economic Growth

Economic growth will soften this year. The war will continue to stoke inflationary pressures, eating into consumers’ pockets. The conflict, coupled with lockdowns in China, also drags on the industrial and external sectors as supply chain issues are aggravated and foreign demand is diminished. A tight labor market should provide some support. FocusEconomics Consensus Forecast panelists project the economy to grow 2.2% in 2022, which is down 0.5 percentage points from last month’s forecast, and to expand 2.7% in 2023.

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Germany Facts

Value Change Date
Bond Yield-0.190.41 %Jan 01
Exchange Rate1.120.65 %Dec 31

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