Germany And Philippines: Increased Inflation And A Recession

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Although inflation is still present, the worst is over. Everything will be OK if you just stick with the existing course of action.

If you think about what first sparked this inflation, this makes sense. Because the economy was growing too quickly, there was an inflationary imbalance between supply and demand. As a result, prices increased, which we saw as inflation.

The Bundesbank stated on Friday in a biannual update of its economic forecasts that inflation in Germany. The euro zone’s largest economy is likely to be higher than previously anticipated. Economic growth will be weaker, and a recession next year is now certain.

the European Central Bank made similar modifications. Which now expects inflation in the 19-country Eurozone. To exceed its target of 2% through 2025. And a brief recession over the winter. The latest predictions are consistent with those revisions.

Inflation in Germany is now going to be 7.2% in 2023. Far higher than the 4.5% estimate from June. While the estimate for 2024 is going from 2.6% to 4.1%. 2.8%  is the initial prediction for 2025.

The growth predictions also show that Germany might perform poorly inside the currency bloc next year. In part because of its too-on use of Russian natural gas. The GDP is predicted to decrease by 0.5% in 2023. Which is a significant shift from the June projections of a 2.4% expansion. The growth estimate for 2024 was reduced from 1.8% to 1.7%, and for 2025. It is projected to be 1.4%.

The energy crisis increases inflation. Reduce real disposable incomes, and hinder household consumption until at least mid-2023, the Bundesbank added, even though nobody anticipates gas shortages. Production is hampered by high energy costs, particularly in sectors that use a lot of energy.

The German economy will gradually rebound starting in the second half of 2023, according to the Bundesbank. This is due to expectations of increased international demand, less uncertainty, diminished price pressure from energy commodities, and decreased inflation rates.

To control inflation, the Philippine president announces additional rate increases

Felipe Medalla, governor of Bangko Sentral ng Pilipinas (BSP), stated that it is “very unlikely” that the central bank won’t raise its policy rates at the next meetings.

The central bank anticipates that inflation, which is now at a 14-year high of 8%, will return to the 2-4% range in the second half of 2019. Medalla said on Bloomberg TV, “We have to do more to ensure that happens.

The BSP indicated on Friday that its band for 2023 and 2024 will remain unchanged, with an inflation target of 2% to 4% for 2025 and 2026.

The central bank stated in a statement that maintaining the targets “underpins the BSP’s determination to take all necessary efforts to restore inflation to a target-consistent path in the medium term.”

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