BERLIN The German economy has shown resilience over the last year thanks to a strong policy response and a mild winter, but economic growth will remain muted in the near term, the International Monetary Fund (IMF) said on Tuesday.
Tighter financial conditions and the energy price shock have begun to weigh on near-term growth, the IMF warned in its country report for Germany.
It forecast growth in Germany's gross domestic product (GDP) to stay near zero in 2023, before gradually strengthening to between 1% and 2% in the period of 2024 to 2026.
Although headline inflation is falling steadily, core inflation is proving sticker, according to the report. "A top priority in the near term is thus to support disinflation with a moderate tightening of the fiscal instance in 2023," it said.
Over the medium term, Germany may need to create more fiscal room for investment in its future, the IMF said. It expects Germany's deficit to narrow to around 0.5% of GDP by 2027 as energy relief measures are phased out.
The IMF warned that uncertainty is high and risks to the baseline forecasts are tilted downward.
(Reporting by Maria Martinez, Editing by Rachel More)
