In the monthly report, Bundesbank said “all in all, despite the higher than expected economic activity in the summer quarter, a recession in the German economy is to be expected in the winter half-year.” Downward forces should “clearly predominate in the coming months”. Weaker global economy will weigh on exports while high inflation is dampening private consumption.
“The inflation rate could remain in the double digits beyond the turn of the year,” it noted. There is still strong cost pressure, especially for industrial products on the upstream stages. Energy prices have recently been declining but are still at a very high level. Passing of raw material prices is not yet complete.
