Lower growth and higher inflation the backdrop for Germany's economy in 2023, Munich-based Ifo say.
Germany is heading for a recession in coming months, with the economy likely to shrink by 0.3% in 2023, the Munich-based Ifo Institute said Monday. More dramatically, Ifo sees German inflation averaging 8.1% across the whole of 2022, but rising to an average annual level of 9.1% across 2023, with prices rising above 11% in the first quarter (See MNI: EC Fears Govts Undermining ECB Inflation Fight-Officials).
“We don’t expect a return to normal until 2024, with 1.8 percent growth and 2.5 percent inflation,” Timo Wollmershauser, Ifo’s Head of Forecasts said.
The forecasts, published in the Ifo Autumn forecast round, paint a gloomy picture for the European Central Bank policymakers, with growth seen lower and inflation even high than in previous forecast rounds. In the ECB’s quarterly projections published last Thursday, growth is seen slowing across the eurozone to 0.9% in 2023, with inflation actually slowing to 5.5% from 8.1% in 2022 (See MNI STATE OF PLAY: ECB Frontloads With 75bp Hike, More Coming).