Bundesbank says Germany's economy will contract through mid-2023

Bundesbank warned of tough times for the German economy through the middle of next year. German businesses and households will have to struggle to pay high energy bills, and it will take a while before Germany sees a recovery. 

According to the revised forecast, the nation’s GDP is likely to decline by 0.5% next year. The GDP growth forecast for 2024 has also been revised down. Inflation is expected to be higher than previously estimated. 

Bundesbank President Joachim Nagel said that economic activity in Germany could slump. However, the economy would gradually recover from the second half of 2023. 

Nagel believes that the European Central Bank should keep raising rates, as inflation in Germany and the euro zone is expected to be above the target level of 2% through 2025.