The German economy exceeded expectations in the fourth quarter of 2022 despite high inflation and the war in Ukraine, Bundesbank economists believe.
“The real gross domestic product (GDP) could have stagnated in the last quarter of 2022 and thus exceeded previous expectations,” says the Bundesbank in the monthly bulletin for January, published this Monday.
“Inflation and uncertainty regarding the war in Ukraine weighed on the economy, although the situation in the energy markets was able to relax significantly compared to the summer,” the entity’s economists add in the report.
In addition, more budgetary measures were applied that partly relieved households and companies of the high energy costs.
Supply problems in industry and construction have also eased.
However, high inflation slows household consumption and therefore the turnover of retailers and gastronomy fell in October and November compared to the summer quarter, the third.
Real GDP rose in Germany in 2022 by 1.9% compared to the previous year and slightly exceeded the pre-pandemic level, recalls the Bundesbank.
But the economic recovery was weakened by Russia’s invasion of Ukraine, which has created new supply problems, inflation and uncertainty about energy supplies.
The recovery of some sectors after the containment measures due to the pandemic were lifted contributed to a strong rise in private consumption.
Exports and investments in technical installations, machines and vehicles also boosted Germany’s economic growth, adds the Bundesbank.