FRANKFURT – There are increasing signs that the German economy is sliding into recession due to the “extremely tense situation in energy supply”, the central bank reported on Monday, forecasting a “noticeable” decline in activity this autumn and winter.

High energy costs are a burden for large industrial consumers, so production in the chemical industry has fallen sharply, and it has also been noticeably reduced in the consumer goods sector, especially among manufacturers of medicines and furniture, Bundesbank notes.

“High inflation and uncertain energy supply and its costs are affecting gas- and electricity-intensive industry and their export business and investments, but also personal consumption and the service sector dependent on it”, they add.

German GDP will probably decline slightly already in the current quarter, and in the period from October this year to the end of March next year activity will decrease noticeably, Bundesbank experts believe.

In the spring, Europe’s largest economy grew by a modest 0.1 percent compared with the previous three months.

Inflation will continue to be the main concern, Budesbank emphasizes, noting that prices in August were 8.8 percent higher than in the same month last year and their growth was even stronger than in January, primarily due to rising food prices.

In the coming months, the inflation rate will probably reach double-digit values due to the abolition of the nine-euro monthly public transport pass program and the end of fuel discounts at the beginning of September.

The announced pressure-relief measures will probably also be reflected in inflation data at the beginning of next year, Bundesbank experts estimate.

Source: seebiz.eu