On Monday, Bloomberg reported that economists are forecasting that the German economy will continue to stagnate over the second half of the year, as fallout from the winter recession continues to impact growth.

The Bloomberg survey, conducted in early August, predicted that following the decline in economic output of the second quarter, economic output will stall in the third quarter, with the decline exceeding analyst estimates.

Previously, the International Monetary Fund predicted that Germany would be the only member of the G7 to face a contraction this year.

Bloomberg noted the German economy’s forecast has been revised down, to reflect expected growth of 0.1% for the fourth quarter, due to weakened domestic demand, and the expectations of exporters for demand to decline.

Weakness in Chinese demand, shortages of qualified workers, higher interest rates, and the continued fallout from the energy crisis which resulted from the loss of access to cheap Russian pipeline gas, have all left German industry struggling.

In a report released on Monday, the German Economy Ministry noted that a “generally expected recovery still failed to materialize in early summer.”

The report went on to note that economic sentiment is being driven downward by, “the still weak external demand, the continuing geopolitical uncertainties, the still high rates of price hikes, and the increasingly noticeable effects of monetary tightening.”

It added, “Current leading indicators such as new orders and the business climate still don’t point to a sustained economic revival in Germany in the coming months.” 

The German economy is expected to contract by 0.3% this year according to analysts, with a rebound of only 0.8% in 2024. The previous forecast had called for a 1% rebound.