Outlook for the German economy for 2023 to 2025

The German economy is predicted to see a decline in the winter half-year, but not a severe downturn, thanks to additional gas imports from other countries and reduced consumption. However, due to the energy crisis, inflation will increase leading to a fall in real disposable income and household consumption until mid-2023. High energy costs will adversely affect production, particularly in energy-intensive industries leading to a reduction in exports. Foreign demand for German goods is also expected to decrease. The high level of uncertainty and increased financing costs will reduce investment in businesses and housing construction. Real government consumption will decrease as the pandemic relief spending comes to an end.