Economic output in Germany stagnated in the second quarter of 2022. Although the services providers which had been constrained during the pandemic received a boost, high price increases and uncertainty in connection with the war in Ukraine weighed on households and enterprises, according to the Bundesbank’s latest Monthly Report. In addition, the unfavourable developments on the gas market are clouding the future outlook and, according to the Bundesbank, are increasing the likelihood of a decline in gross domestic product in the fourth quarter of 2022 and the first quarter of 2023.

Bundesbank President Jens Weidmann sees Brexit and the global trade dispute as the two largest risks to Germany’s economy. In a speech delivered in Mannheim, he called on politicians to resolve the conflicts.

The German economy is currently following a growth path that is primarily underpinned by domestic demand. Commenting on the Bundesbank's latest semi-annual projection, the Bank's President Jens Weidmann said: "The main drivers are the favourable labour market situation and substantial increases in households' real disposable income, though foreign trade is currently being hampered by frail demand from the emerging market economies." This is making itself felt on industrial investment, the Bundesbank's economists write.

The German current account recorded a surplus of €18.8 billion in March 2022, down €2.3 billion on the previous month’s level.

The advantages or disadvantages firms experience as a result of their size, referred to in the economic literature as returns to scale, are of central importance in many economic models. Increasing returns to scale, whereby unit costs decrease as output volume increases, could explain productivity differences between Europe and the United States. We present fresh evidence on the returns to scale of European firms: most exhibit constant returns to scale, but a non-trivial share also show increasing returns to scale.