Germany’s Economy Faces Stagnation as Bundesbank Remains Pessimistic, While China Implements Rate Cuts Again
Germany’s economy, which had already entered a recession at the end of last year, is projected to face another quarter of stagnation, according to the country’s central bank, the Bundesbank.
The Bundesbank described Europe’s largest economy as “still lacklustre” and “still experiencing a period of weakness.”
In its somber update, the bank stated, “German economic output will probably remain largely unchanged again in the third quarter.”
The Bundesbank said Europe’s largest economy is ‘still lacklustre’ and ‘still experiencing a period of weakness’
Germany has earned the reputation of being ‘the sick man of Europe,’ as its output declined by 0.4% in the final three months of last year and another 0.1% in the first three months of this year.
This consecutive decline for two quarters pushed the economy into a recession, with no growth recorded in the second quarter. The Bundesbank believes the same trend will continue in the third quarter, spanning from July to September.
This forecast reaffirms Germany’s status as the underperforming entity among the world’s largest developed economies.
According to the International Monetary Fund (IMF), Germany is projected to be the only member of the Group of Seven advanced nations to shrink in 2023. The Bundesbank also cautioned that despite recent declines, inflation may remain above 2%.
‘The ongoing high wage pressures could make it harder to press ahead with curbing inflation,’ the report stated.
China Implements Rate Cuts Again
In efforts to boost a declining demand, China cut interest rates yesterday.
The recovery of the world’s second-largest economy has weakened due to a worsening property industry and low consumer spending. However, as there is downward pressure on the currency, Beijing has limited room for significant interest rate cuts.
Consequently, the People’s Bank of China decreased the one-year loan prime rate, a benchmark cost of borrowing, by 0.1 percentage points to
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