HomeFinancial MarketsBundesbank Believes That German Recession is Likely

Bundesbank Believes That German Recession is Likely

Bundesbank stated in its monthly report released on Monday that Germany is increasingly likely to be hit by a recession. The euro zone’s largest economy, Germany is facing a skyrocketing inflation rate that is expected to surpass 10% this autumn.

Germany’s heavy reliance on Russian gas has led to widespread energy uncertainty due to the ongoing low supply. Furthermore, surging energy costs are also impacting Germany’s supplies. “The high degree of uncertainty over gas supplies this winter and the sharp price increases are likely to weigh heavily on households and companies,” the Bundesbank said of the situation.

Supply shortages and rising costs have led Germany to reduce energy consumption which has hampered production levels across industries such as metal output and fertilizer production where energy is crucial.

According to Bundesbank, some consequences that could arise as a result of the ongoing energy shortage include a rise in wages, a record decline in employment, and further inflation as a result.

Last month, the European Central Bank raised interest rates in an effort to combat the ongoing inflationary pressure. Due to the seemingly unwavering economic outlook, further hikes are expected to be implemented.

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