Germany Economic Forecast

Germany Economic Outlook

May 31, 2022

A detailed breakdown of Q1 national accounts confirmed the preliminary result of moderate growth, which was mainly driven by fixed investment and inventories. Household spending fell, as higher inflation and deeply pessimistic consumer sentiment more than offset the positive effect of the economic reopening. While the economy is expected to hold up relatively well in Q2, with composite PMI data for April and May showing a continued improvement in operating conditions, other data calls for caution. The war in Ukraine continues to weigh heavily on business and consumer sentiment. Moreover, both harmonized consumer and producer price inflation reached record highs in April, suggesting that price pressures will continue to hamper activity. Meanwhile, the European Commission recently highlighted the investment environment, productivity, digitalization and pensions as areas in need of reform.

Germany Economic Growth

The pace of economic growth will moderate this year amid the fallout from the war in Ukraine. Elevated commodity prices will undermine consumer purchasing power and exacerbate supply chain issues for industry. Lockdowns in China may lead to additional supply bottlenecks and could also depress export demand. However, a tight labor market should provide some support. FocusEconomics Consensus Forecast panelists project the economy to grow 2.0% in 2022, which is down 0.2 percentage points from last month’s forecast, and to expand 2.5% 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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