German economy 'still struggling': Bundesbank chief

Frankfurt: The German economy is set to shrink in 2023 after a weak start to the year and as consumers continue to rein in spending because of stubbornly high inflation, Bundesbank president Joachim Nagel said Friday. Europe's largest economy is projected to contract by 0.3% in 2023, according to the central bank's newest forecasts.

Back in December, the Bundesbank was still expecting a 0.5% contraction, but it said falling energy prices had slightly improved the outlook.

"The German economy is still struggling with the consequences of high inflation. This is reducing citizens' purchasing power," Nagel said in a statement accompanying the forecasts.


Germany unexpectedly slipped into a mild recession in the final months of 2022 and the start of 2023, as the energy crisis sparked by Russia's invasion of Ukraine and higher interest rates took their toll on companies and households.

Although the economy was "slowly regaining its footing" after the winter slump, it will take until 2024 and 2025 for the recovery to really gain momentum, Nagel said.