Bundesbank expects recession

The German Central Bank (Bundesbank) has shared its forecast that the German economy will continue to contract in the first quarter of this year. The Bundesbank stated in its monthly report that the German economy is probably in recession due to weak external demand, cautious consumer stance, high borrowing costs and decreased investments. The report stated that recovery has not yet been seen and included the statement, "Production may fall slightly in the first quarter of 2024. With two consecutive declines, the economy may enter a technical recession." Despite the weak outlook, the Bundesbank announced that it does not expect a deterioration in the labor market and a widespread recession. The German economy is going through a difficult period due to Russia's invasion of Ukraine in 2022, which will increase energy costs. Germany was the only G7 country to contract last year due to the slowdown in the manufacturing sector. The IMK Institute, one of Germany's leading economic think tanks, also stated that the risks that the economic contraction will continue in the second quarter of the year have increased.