Inflation has taken a heavy toll on the German economy, with consumers spending less on items such as food and clothing. To make matters worse, the outlook for the rest of the year isn't looking much brighter.
Germany will dodge a feared recession in 2023, according to a forecast by main German economic institutes. But they say inflation will remain high.
The European Commission has revised its economic forecasts upwards slightly, predicting growth of almost 1% in the bloc for 2023. Inflation is expected to slow but remain high, a little more so outside the eurozone.
The International Monetary Fund has given a brighter outlook in its latest report than in October, predicting that inflation will slow. It said that European economies had shown more resilience than expected.
The German economy is withstanding the aftershock of the Ukraine war better than prior projections showed.
The EU's Economic Commissioner said the bloc had encouraging economic news and may avoid a much-feared deep recession in 2023.
Kristalina Georgieva, the managing director of the International Monetary Fund, is warning that this year will be tougher than the last and that the war in Ukraine, rising inflation and higher interest rates will weigh heavily on the global economy. She expects the EU to be particularly hard hit, with half of its members seeing declines in growth.
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