Mumbai, June 18 -- Bundesbank, the German central bank has noted that the German economic recovery, which had just begun in the winter half-year, will initially be slowed by the war in the Middle East. The sharp rise in energy prices will dampen households' purchasing power and consumption expenditure. It will also weigh on firms' costs. In addition, firms will also face increased supply bottlenecks and, in many cases, weaker demand. Elevated uncertainty and higher interest rates will be a drag on private investment.
Expansionary fiscal policy will be the only thing preventing a decline in gross domestic product (GDP) in the summer half-year. It will provide a strong boost to growth through to the end of the forecast horizon: the cumulativ...