FRANKFURT (Reuters) – Germany’s economy is expected to grow in the third quarter at a somewhat weaker pace than forecast last month and could face another spike in inflation in September due to the end of government subsidies, a the Bundesbank announced on Friday.
Germany, like all European countries, is facing an increase in energy prices with in particular the reduction of gas deliveries from Russia in response to the sanctions imposed for the outbreak of the war in Ukraine.
“For the current quarter, GDP growth is likely, from the current perspective, to be somewhat weaker than projected in the baseline scenario of the June Bundesbank projections,” the German central bank said.
While its growth estimate for the third quarter is not public, that for 2022 is 1.9%.
The Bundesbank expects inflation, which hit 8.2% in June, to remain high in the coming months, possibly even peaking in September, when government subsidies on fuel and train tickets will end on August 31.
“The future development of the energy market is very uncertain, especially with regard to natural gas deliveries to Russia,” the Bundesbank said. “Risks to the price outlook are clearly on the upside.”
(Report Francesco Canepa, French version Laetitia Volga, edited by Kate Entringer)
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