Technical Analysis

Deutsche Bank revises German 2023 GDP forecast to 0% from -1.0%

You don’t need to look around markets for long to see signs that sentiment around Europe has improved and now Deutsche Bank is quantifying it. Economists there have boosted their 2023 eurozone GDP forecast to 0% from -1.0% at year end.

They note that Germany performed surprisingly well in 2022, growing 1.9% despite the industrial and energy headwinds.

“The major growth engine was private consumption surging by 4.6%,
supported by the end of COVID restrictions, pent-up savings and fiscal policy
measures to cushion the real income losses provided by surging inflation. The
stable labor market was also a supporting factor,” DB economists write. “The outlook for Q1 has improved as well, owing to recent favorable gas storage
levels and the substantial decline in wholesale gas prices as well as increasing
optimism after the rapid change in China’s COVID policy.”

They see “much weaker” private consumption in 2023 despite better wages. They see falling exports and a drag from ECB policy leading to flat GDP in 2023.

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