In the last quarter of 2022, Germany experienced a light contraction of GDP relative to the previous quarter, due to lower private consumption, investments and exports. However, GDP is still 1.14% above its level in the previous year. As in many other countries, persisting bottlenecks affecting global value chains, rising energy prices, and uncertainty related to the Russian invasion of Ukraine have raised the inflation rate, now at 8.6%, relative to the previous year. Unemployment is stable at a low 3%. The OECD economic outlook expects annual inflation to gradually decline throughout 2023, reaching 6% towards the end of the year, and to decrease to 2.5% by the end of 2024. GDP is expected to grow at an average annual rate of 5% until the end of 2024. This projection has been revised upwards compared to the last quarter, because the negative effect on GDP of ECB’s restrictive monetary policy (aimed at slowing down inflation) has been revised downwards. Unemployment is expected to increase to 3.6% in the first half of 2023, and then to stabilize at around 3.5% in 2024.

April 2023