The International Monetary Fund (IMF) reported that a slight contraction is expected in the German economy this year due to the energy shock and tightening financial conditions.
The International Monetary Fund (IMF) reported that a slight contraction is expected in the German economy this year due to the energy shock and tightening financial conditions.
In the statement made by the IMF, it was reported that the 4th article consultation on the German economy was completed.
Pointing out that the German economy showed resistance despite the interruption of natural gas supply from Russia last year, it was stated that negative scenarios regarding energy shortage were avoided due to strong efforts to protect gas supply and secure energy resources, as well as the fact that winter conditions were not severe.
In the statement, it was stated that the negative effects of the energy shock and the tightening financial conditions in recent months were enough to keep the economy on the verge of falling into recession.
Reminding that inflation increased with the addition of the energy price shock to the existing bottlenecks related to the epidemic, it was stated that inflation was on the decline as these effects eased.
Expected gradual acceleration in 2024-2025
The overall capital and liquidity positions of Germany’s banking and insurance systems remain solid, but the banking crisis in other advanced economies earlier this year increased potential financial stability risks associated with rising interest rates.
“The energy shock and tightening financial conditions are expected to keep annual gross domestic product (GDP) growth somewhat negative in 2023,” the IMF said in a statement.
In the statement, it was stated that the growth of the country’s economy is expected to gain momentum gradually in the 2024-2025 period as the delayed effects of monetary tightening gradually pass and the economy adapts to the energy shock.
The statement warned that uncertainty about the economic outlook is unusually high.