Germany started the year with little economic growth relative to the previous quarter, due to stagnant consumption levels and a contraction of exports. GDP, however, is significantly higher than in the same quarter of the previous year, when COVID was still holding back economic activity. Since then, consumption levels have spiked and international trade has risen again. The economic recovery, production bottlenecks of Chinese manufacturing firms that were forced to stop during the pandemic, soaring energy prices, and uncertainties related to the Russian invasion of Ukraine, have contributed to increasing inflation rates, at 2.11 percent relative to the previous quarter and at 5.77 percent relative to the previous year. According to the OECD economic outlook, annual inflation is expected to stay around 3 percent for the next quarters and to decrease to about 2 percent in 2023. GDP is expected to grow at an annual rate of more than 5 percent until 2022-Q3 and to slow down to 4.0-4.5 percent thereafter, while unemployment is expected to decrease slightly, but steadily, towards 2023.

July 2022