Goldman Sachs issues recession warning as ‘Sick Man of Europe’ Germany falls into crisis | Personal Finance | Finance

Germany is continuing to fend off accusations of being the “sick man of Europe” as its economy continues to falter.

Analysts from Goldman Sachs recently outlined the various economic issues which have plunged the country into recession this year.

The nation fell into a technical recession in the first quarter of 2023 as GDP growth was revised from zero to negative 0.3 percent.

As a result, Germany has been rebelled as the “sick man of Europe”, a moniker it once held in 1998 following the fall of the Berlin Wall.

Experts are citing higher energy costs and a struggling Chinese economy which is having a knock-on effect on the G7 country’s economic outlook.

Speaking to CNBC, Peter Oppenheimer, a chief global equity strategist and head of macro research EMEA at Goldman Sachs, emphasised why Germany is struggling to get back on its feet following the pandemic.

He explained: “The predicament that the economy is facing at the moment is really down to a number of factors.

“It’s … not a deep recession but it’s obviously been more hit by obvious headwinds.”

These recent statements come shortly after the latest forecasts by the Budnesbank, Germany’s central bank.

Yesterday, the financial institution projected the economy is likely to shrink this quarter due to slow private consumption and industry stagnation.

Despite this, the Goldman Sachs strategist cited certain positive aspects of Germany’s economic outlook that people should consider.

Mr Oppenheimer added: “The equity market has been holding up quite well and there are some bright spots, I think, in terms of activity in the economy.”

According to Goldman Sachs, Germany’s DAX index will experience“fat and flat” returns through the year which mirrors the rest of Europe.

In a research note, the bank stated: “Over the short term, we could see a rebound in the DAX along with

“Over the short term, we could see a rebound in the DAX along with a broader range of China-related assets.

However, the financial institution noted that there is no guarantee that Chinese trade will provide the required boost to the economy.