Country Economic Forecasts - Germany

Country Economic Forecasts - Germany

We have lowered our 2022 GDP growth forecast to 3.5% from 3.9% seen last month. GDP fell by a slightly larger than expected 0.7% q/q in Q4 last year as the latest infection wave took its toll and, although high-frequency and survey data for January was fairly encouraging, we have become more downbeat about the outlook. Material upward revisions to our oil and gas price outlook mean we now see inflation rising this year to close to 4% after 3.1% last year. This drag on real incomes will dampen the consumer recovery. Nonetheless, some additional fiscal support, pent-up demand and easing supply bottlenecks will support solid growth this year, and 2023 expansion is now seen at 3.0%.