MNI BRIEF: 2023 German GDP Outlook Downgraded By Almost 1%

Germany's economy will shrink by 0.6% this year, according to the Joint Economic Forecast published on behalf of the Federal Ministry for Economic Affairs and Climate Action on Thursday, a downward revision of 0.9% from the spring forecast, before expanding by 1.3% for 2024 -- 0.2 percentage points below the previous assessment (see MNI INTERVIEW: Germany Faces 10-15Y Labour Shortage - Wise Man).

Headline inflation is ex­pected to be 6.1% in 2023, falling to 2.6% in 2024, with core inflation standing at 6.1% and 3.1%, respectively. Unemployment is seen rising "moderately" to 2.6 million people in 2023. In the coming year the number of unemployed will probably decrease "somewhat."

"The most important reason for this revision is that industry and private con­sumption are recovering more slowly than we expected in spring," said Oliver Holtemöller, Vice President and Head of the Macroeconomics Department at the Halle Institute for Economic Research (IWH) .