OUR German economy will slide into recession Since the third quarter of the year, mainly due to a sharp decline in consumer sentiment among citizens, the country’s four leading economic institutions have been assessing in their periodic report, which will be published tomorrow.

According to the report, available to Reuters, the decline will be from 0.2% in the third quarter to 0.6% in the fourth quarter, and in the first quarter of next year it will be limited to 0.4%. The German economy is then expected to gradually return to a slightly positive growth rate.

The economic institutions IW Kiel, IMK Dusseldorf, ISW Munich and IZA Bonn, which have informal advisory functions to the federal government, will also point out that the downward trend in the economy is mainly due to lower consumption due to energy crisis and high inflation. Consumption, the report says, will begin to recover next summer.

Has the successful German model come to an end?

“The war in Ukraine probably ended a very successful German economic model: importing cheap (Russian) energy and raw materials, exporting high-quality products to the world, and benefiting from globalization,” ING economist Karsten Brzeski said in an interview with WirtschaftsWoche.

“High inflation reduces the desire of consumers to shop, which means that companies have less money to invest. This could mean the start of a downward trend that will last one or two years,” adds Marcel Fratscher of the German Institute for Economic Research (DIW), pointing out that higher energy prices are taking a heavy toll on businesses, many of which have already shut down production. some products because they don’t make a profit. Added to this are problems in the supply chain, which are exacerbated by the frequent lockdowns that China has so far imposed in the context of the “zero cases” policy of the coronavirus.

^{Source: APE-MEB}