MNI BRIEF: German GDP Flat, But Inflation At 2.2% By 2024
Germany's economy likely to stagnate this year before modest rebound, with wages supporting demand
Germany's GDP growth is likely to shrink from +1.8% last year to -0.1% in 2023, the Munich based Institute for Economic Research (ifo) reported Wednesday, with construction falling 3.4%. Average annual inflation is seen edging down to 6.2% in 2022, then falling to 2.2% in 2024, just above the ECB’s harmonized pan-eurozone 2% target rate. (see MNI SOURCES: ECB Clings To 50Bp Hike Plan Amid Market Turmoil).
Overall economic output is seen falling 0.2% in the first quarter. From the middle of the year “at the latest,” slowly falling inflation and rising real incomes due to continued tight labour markets and strong pay increases, are expected to support consumption, allowing growth to return to +1.7% in 2024. Unemployment is expected to be up 0.1% on 2022 at 5.4%, dipping to 5.1% in 2024 (see MNI BRIEF: German GDP Weak Despite Gas Price Drop: IWH).