In the second quarter of 2023, Germany has experienced no economic growth. The country is still in a phase of economic recession. Although investments have grown by almost 1.68% relative to the previous year, private consumption and government spending have contracted, following the withdrawal of the government’s fiscal stimulus package to support households and firms during the energy crisis in 2022. Inflation is still high at 6.55%, because of production bottlenecks in the aftermath of the pandemic, still relatively high energy prices, and persistent geopolitical tensions due to the Russian invasion of Ukraine. Nevertheless, it is gradually decreasing, as a consequence of the repeated monetary policy tightening of the ECB in the previous quarters. Labor markets are still tight, with unemployment having decreased slightly to 2.9%. The OECD economic outlook expects annual inflation to gradually decline throughout 2023, reaching 3.6% towards the end of the year, and to decrease below 3.0% until the end of 2024. GDP is expected to grow at an average annual rate of 4% until the end of 2024. Unemployment is expected to decrease slightly and to stabilize at around 2.8% in 2024.

October 2023