The Bundesbank, Germany's central bank, stated on Wednesday that a significant recovery in Germany's economy is currently unlikely. This comes after two years of diminishing output and minimal growth in recent quarters. The future of Europe's largest economy remains uncertain, the bank noted in its monthly report.
The Bundesbank also pointed out that the inflation rate in Germany continues to be high. The German economy is not expected to break free from its extended period of stagnation in the first quarter of 2025, the bank announced. This stagnation can be attributed to a weak manufacturing sector and uncertainties that are suppressing private expenditure.
The bank also highlighted that price pressures in Germany are anticipated to stay high at the beginning of the year. The rising carbon price on fossil fuels, nationwide public transportation, and private health insurance are some of the factors contributing to this inflation.
However, the Bundesbank anticipates that the inflation rate will likely decrease in the upcoming months. Despite the recent significant price increases in services, these are expected to moderate, although they will continue to be significantly higher than their long-term average.
