In recent times, Germany is facing yet another period of economic contraction. The country’s economy has been weakened by challenges such as high energy costs and supply chain disruptions. Despite these difficulties, the Bundesbank’s latest report suggests there may be signs of recovery in the coming year.
The forecast for the German economy indicates that it will continue to struggle in the final quarter of 2023, extending an industrial downturn that has been exacerbated by various factors such as the war in Ukraine, rising energy prices and rising interest rates. Only one quarter this year experienced growth, highlighting the severity of the economic challenges faced by the country.
However, there is hope for 2024 as solid employment figures and potential wage increases could support an eventual rise. Additionally, there are tentative signs of a recovery in foreign demand and an expected increase in real consumption from higher net incomes. These positive factors provide some optimism for the future.
Despite these potential drivers, there is still no definitive sign of a recovery in global industrial activity as new orders continue to decline and overall demand remains weak. The exchange rate also remained stable after the release, with EUR/USD trading at 1.0930.
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