German economy: Out in the coldGerman economy: Out in the cold. The real income and confidence shock resulting from the NS1 shutoff as well as the negative real wealth shock of some EUR 1.5 tn will likely send private consumption into a tailspin in 2023. Surging uncertainty and the energy shock causing a slump in competitiveness and profits will put a brake on corporate investment spending, in our opinion. The three fiscal packages and a probable additional one will likely not prevent a GDP slump. Together with a weaker global outlook, we expect the loss in final domestic demand to result in a GDP drop of 3% to 4% in 2023, after an increase of around 1% in 2022.
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