German economy more resilient than feared, Bundesbank says

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Germany, which is heavily dependent on Russian gas, was expected to suffer a recession this year, a prospect that was unfolding throughout the 20-nation euro zone.

“Gross domestic product growth is likely to be more or less stagnant in the last quarter of 2022, exceeding previous expectations,” the Bundesbank said. “Recent data releases were better overall than assumed in the December projections.”

Market-based natural gas prices have more than halved since early December as consumption remains weak due to mild temperatures and Europe manages to find more gas on the market than expected.

Government subsidies to ease the pain of high energy costs for both households and businesses also helped boost confidence and consumption, the Bundesbank added.

First quarter GDP data for the euro area is released on January 31 and, while official forecasts see a slight decline, economists and policy makers have recently argued that the figure it can even be positive, suggesting that even if growth is weak, there may be a recession. avoided.

(Reporting by Balazs Koranyi; Editing by Andrew Heavens)

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