German central bank warns of recession, citing strikes
The German central bank, the Bundesbank, on Monday warned that a technical recession was possible by the end of the first quarter of 2024, particularly given recent strikes and their impact on infrastructure like public transport and airports.
The Bundesbank said it could 'not be ruled out, that the various strikes, among other places in areas like rail and air travel, reduce productivity.'
The next round of such strikes scheduled for Tuesday this week will affect German airports, with Lufthansa ground staff from trade union Verdi stopping work.
Germany's gross domestic product contracted by 0.3% year-on-year in the last quarter of 2023, as well as shrinking over the entire year combined.
'With the second consecutive [quarterly] reduction in economic performance Germany's economy would find itself in a technical recession,' the Bundesbank said.
However, the central bank also sought to stress that it believed the potential recession would be shallow and short-lived.
'The period of weakness since the start of the Russian war of aggression against Ukraine would therefore continue,' the bank wrote.
'But a recession in the sense of a considerable, widespread and lasting contraction of economic performance still cannot be observed and is also not to be expected.'
The bank cited improving personal finances for many in Germany, and what it believed was positive prospects for consumption as a result, pointing to high employment figures, rising wages, and an inflation rate that is falling and again nearing the German and European target of around 2%.
It said a continued modest reduction in inflation appeared likely in the near future, having reached 2.9% in Germany — the lowest level in around two-and-a-half years — in January.
The Bundesbank cautioned, however, that consumers might continue to act cautiously, despite the improving situation, given the strains of first the COVID pandemic and then the subsequent cost of living and supply chain pressures that were exacerbated by rising fuel and energy costs after Russia's invasion of Ukraine.
And the bank also warned of potential pressure on Germany's crucial export market, saying demand for German-made goods appeared to be 'reducing considerably.'
DW
The German central bank, the Bundesbank, on Monday warned that a technical recession was possible by the end of the first quarter of 2024, particularly given recent strikes and their impact on infrastructure like public transport and airports.
The Bundesbank said it could 'not be ruled out, that the various strikes, among other places in areas like rail and air travel, reduce productivity.'
The next round of such strikes scheduled for Tuesday this week will affect German airports, with Lufthansa ground staff from trade union Verdi stopping work.
Germany's gross domestic product contracted by 0.3% year-on-year in the last quarter of 2023, as well as shrinking over the entire year combined.
'With the second consecutive [quarterly] reduction in economic performance Germany's economy would find itself in a technical recession,' the Bundesbank said.
However, the central bank also sought to stress that it believed the potential recession would be shallow and short-lived.
'The period of weakness since the start of the Russian war of aggression against Ukraine would therefore continue,' the bank wrote.
'But a recession in the sense of a considerable, widespread and lasting contraction of economic performance still cannot be observed and is also not to be expected.'
The bank cited improving personal finances for many in Germany, and what it believed was positive prospects for consumption as a result, pointing to high employment figures, rising wages, and an inflation rate that is falling and again nearing the German and European target of around 2%.
It said a continued modest reduction in inflation appeared likely in the near future, having reached 2.9% in Germany — the lowest level in around two-and-a-half years — in January.
The Bundesbank cautioned, however, that consumers might continue to act cautiously, despite the improving situation, given the strains of first the COVID pandemic and then the subsequent cost of living and supply chain pressures that were exacerbated by rising fuel and energy costs after Russia's invasion of Ukraine.
And the bank also warned of potential pressure on Germany's crucial export market, saying demand for German-made goods appeared to be 'reducing considerably.'
DW
The German central bank, the Bundesbank, on Monday warned that a technical recession was possible by the end of the first quarter of 2024, particularly given recent strikes and their impact on infrastructure like public transport and airports.
The Bundesbank said it could 'not be ruled out, that the various strikes, among other places in areas like rail and air travel, reduce productivity.'
The next round of such strikes scheduled for Tuesday this week will affect German airports, with Lufthansa ground staff from trade union Verdi stopping work.
Germany's gross domestic product contracted by 0.3% year-on-year in the last quarter of 2023, as well as shrinking over the entire year combined.
'With the second consecutive [quarterly] reduction in economic performance Germany's economy would find itself in a technical recession,' the Bundesbank said.
However, the central bank also sought to stress that it believed the potential recession would be shallow and short-lived.
'The period of weakness since the start of the Russian war of aggression against Ukraine would therefore continue,' the bank wrote.
'But a recession in the sense of a considerable, widespread and lasting contraction of economic performance still cannot be observed and is also not to be expected.'
The bank cited improving personal finances for many in Germany, and what it believed was positive prospects for consumption as a result, pointing to high employment figures, rising wages, and an inflation rate that is falling and again nearing the German and European target of around 2%.
It said a continued modest reduction in inflation appeared likely in the near future, having reached 2.9% in Germany — the lowest level in around two-and-a-half years — in January.
The Bundesbank cautioned, however, that consumers might continue to act cautiously, despite the improving situation, given the strains of first the COVID pandemic and then the subsequent cost of living and supply chain pressures that were exacerbated by rising fuel and energy costs after Russia's invasion of Ukraine.
And the bank also warned of potential pressure on Germany's crucial export market, saying demand for German-made goods appeared to be 'reducing considerably.'
DW
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German central bank warns of recession, citing strikes
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