Germany forecast to skirt recession

Germany is expected to narrowly escape recession and post modest growth in the first quarter of the year, according to the forecasts of leading economic institutes seen by Reuters on Tuesday.

The so-called Joint Economic Forecasts, to be presented in Berlin on Wednesday, expect a 0.1% expansion in gross domestic product in the first quarter. This follows a 0.4% contraction in the fourth quarter of 2022.

A recession is commonly defined as two successive quarters of contraction.

The five economic institutes which prepare the Joint Economic Forecasts predict GDP growth in Germany of 0.3% in 2023, up from a predicted contraction of 0.4% in the autumn, two sources familiar with the data told Reuters.

For 2024, the institutes - four German and one Austrian - forecast GDP growth of 1.5%, down from 1.9% previously.

In its annual economic report published in January, the German government forecast growth of 0.2% for 2023. The economics ministry will update its forecasts incorporating the results of the Joint Economic Forecasts this spring.

The economic institutes predict inflation of 6.0% in 2023, before slowing to 2.4% in 2024.

The Joint Economic Forecasts are prepared by the Ifo Institute, the Halle Institute for Economic Research, the Kiel Institute for the World Economy, the RWI – Leibniz Institute for Economic Research and the Austrian Institute of Economic Research.