Bundesbank said in the monthly report that there are “increasing signs that the German economy is slipping into a recession”. It added, “the high inflation and the uncertainty regarding the energy supply and its costs affect not only the gas and electricity-intensive industry and its export business and investments, but also private consumption and the service providers dependent on it.”
Gas supply situation is expected to “remain extremely tense in the coming month”. For Q4 and Q1, economists expect a “noticeable decline in economic output”, and outlook is “extremely uncertain”.
Regarding inflation, Bundesbank said the fiscal relief package will only be reflected in consumer prices at the beginning of next year. “The bottom line is that the inflation rate should move into the double digits in the next few months,” it added.
