German economy likely in recession as Russia's aggression takes toll, warns Federal Bank
2:42 PM EST, February 19, 2024
"Germany has been grappling with rising energy costs since Russia invaded Ukraine in 2022. Consequently, their large, industry-heavy economy is now experiencing its fourth consecutive quarter of zero or negative growth. The impact of this is being felt across the entire Eurozone," writes Reuters.
The issues plaguing the German economy are not hidden in the new quarterly report of the German Federal Bank. The Deutsche Bundesbank stated that Germany is likely in a recession. The reasons go beyond high energy prices, including weak external demand, hefty costs of domestic investments, and consumer wariness.
"Production may slightly decrease once again in the first quarter of 2024. If economic production drops for the second consecutive time, the German economy would technically be in a recession," the Bundesbank reveals in the report.
Germany's "success on feet of clay"
The lacklustre results have cast doubt on the viability of Germany's economic model, as outlined by Reuters. Nevertheless, the agency mentions that the German government is resolved to weather this "storm," believing that the present problems are transitory. Moreover, the government is refuting gloomy forecasts for the energy-intensive industry, anticipating increased demand from China, among other things.
On the other hand, the Bundesbank cautions that the economic downturn is set to persist. "The bleak phase of the German economy, which has been in effect since Russia started its aggressive war on Ukraine, is thus set to keep going," the bank publicizes. However, it anticipates no significant deterioration in the job market situation.
Recently, the German economy surpassed Japan's, making it the third largest in the world. "But this victory rings hollow, as the country's economy is at a standstill. It's a success on feet of clay," retorts the "Frankfurter Allgemeine Zeitung."
