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The German economy is likely to fall in the first quarter but the decline will be slower than in the final quarter of 2022, Bundesbank said in its monthly report on Monday.
The largest euro area economy had contracted 0.4 percent in the fourth quarter of 2022. The second consecutive quarter of contraction suggests that the economy entered a technical recession.
Despite the current weakness in the economy, Bundesbank said the labor market remained slightly positive. The jobless rate is forecast to fall slightly in the coming months. Inflation is expected to decline significantly in March due to the base effect. But the bank said core inflation is proving to be extraordinarily persistent.
