“The external environment is likely to allow the largely export-oriented German economy to deliver only weak growth in the summer months,” IMK economist Thomas Theobald was quoted as saying by the Handelsblatt newspaper.
Some industries, such as the auto industry, will continue to experience significant supply shortages even when they are wiped out, he said.
IMK experts are also increasingly concerned about the “weakly dynamic external economic environment.” The economic situation in the US is deteriorating due to high interest rates, while the Chinese economic recovery, in contrast to the previous period, did little to stimulate the German export economy.
Analysts say it would be even more important for the European Central Bank not to raise rates too far beyond the restrictive band and cut domestic demand disproportionately to maintain price stability.
Since the interest rate change in July 2022, regulators have already raised benchmark rates by a total of 3.75 percentage points seven times in a row to curb inflation. According to a Reuters survey, specialists expect new gains of 0.25 points each time at the next two ECB meetings in June and July.