The Bundesbank expects the recession to continue until 2023

The German economy is heading towards a long-term economic recession that will continue until next year, according to the expectations of the German Central Bank, which said that economic growth in Germany will be affected in the third quarter and beyond by unfavorable developments in the gas market.

The German Central Bank expected the economy to be heading towards a long-term recession that will continue until next year, after the deterioration in supply conditions and the energy crisis caused by the Russian war on Ukraine.

The central bank said in a monthly report on Monday that the decline in energy shipments, as a direct result of the Russian war in Ukraine, is driving up prices and heightening uncertainty in Germany affecting businesses and households.

And the bank's report stated: "Economic growth in Germany will be affected in the third quarter and beyond by unfavorable developments in the gas market. Therefore, economists' expectations have increased significantly that GDP will decline by the last quarter of 2022 and the first quarter of 2023."

"There are increasing signs of stagnation in the German economy in terms of a clear, widespread and long-term decline in economic output," he added, according to the Financial Post .

It is likely that the country will be able to avoid the bad situation described in the bank's forecast for June, which forecast an overall decline of 3.2 percent over 2023, yet the forecast remains "very uncertain", according to the newspaper.

Inflation is also set to rise further in the coming months after the end of certain government support measures to cut fuel and public transport costs, while the Bundesbank has indicated that general inflation may fall into a double-digit range.

The German Ifo Institute for Economic Research had also expected a recession during the winter and a high rate of inflation.

According to estimates by the European Commission, the German economy is expected to grow by only 1.4 percent this year, while the International Monetary Fund expects economic growth of only 1.2 percent for the whole year.

The German government recently agreed to allocate a relief package worth 65 billion euros, to help millions of families, consumers and entrepreneurs deal with the crisis in the prices of energy supplies and electricity, in light of the worst energy crisis in Germany and the continent of Europe in decades.