Outlook for the German economy for 2022 to 2024 | Deutsche Bundesbank - June 2022 |

The German economy is withstanding the headwinds of Russia's war against Ukraine, high infla- tion and supply bottlenecks. Even so, owing to these factors, its recovery is considerably more muted than was assumed in the December projection. In the baseline scenario of the projection, it is assumed, that the conflict with Russia will not intensify any further. In an adverse risk scen- ario including a cessation of Russian energy supplies, by contrast, economic activity would experi- ence a pronounced decline.

The German economy is caught between opposing forces ....

Under these conditions, the German economy is projected to grow by around 2% in 2022, by approximately 2.5% in 2023 and by just under 2% in 2024, the year in which it will thus reach its potential output. The labour market will remain on an upward trajectory, with wages rising sharply, but the high level of inflation only being partially offset initially.

At around 7% in the current year, inflation as measured by the Harmonised Index of Consumer Prices (HICP) will even be somewhat higher still than at the start of the 1980s. This is mainly due to the rapid rise in the prices of energy and food commodities.

Bundesbank report | Dec. 2021 |

'Sapere aude'