Financial Education - German bank warns of possible double dip recession

One of the news with the greatest impact today is how the German Bank warns of a possible double recession, a double recession clearly differentiated in two periods. The first would be between the last quarter of 2022 and the first quarter of 2023 in which the high energy costs.

The possible recession in the United States and the impact of a "substantial" monetary tightening would take their toll on the European economy, while the second would begin after a possible "false start" during the spring and summer, a period in which the revival of tourism would mark the major growth phasey.

Despite this double contraction of the economy, the recession would not be as deep as in the first estimates made by DB experts. We see two risks to the growth outlook. One is a 'double-dip' recession: the euro area briefly emerges from recession before succumbing to a new contraction in the latter part of 2023 as economic headwinds increase. Still, this is not the only negative scenario being contemplated.

In this regard, they have also warned of the possibility of a "delayed recession late next year." Inflation is the main cause of this stagnation of the economy forecast for 2023.

Core inflation is unlikely to clearly peak until some more time has passed. Risks to inflation are on the upside, and market and consensus views on inflation remain too benign.