Major bank issues warning over German economy

Lazy eyes listen


Germany’s manufacturing sector continues to face issues as a result of increasing energy costs, according to Goldman Sachs analyst Peter Oppenheimer, who spoke to CNBC on Tuesday.

The largest economy in the EU officially entered a technical recession in the first quarter of the year, with GDP growth reduced from zero to -0.3%. The Bundesbank said on Monday that the economy is likely to contract this quarter due to slowing private consumption and increasing industry difficulties.

“The current economic situation is really due to a number of factors,” said Oppenheimer, chief global equity strategist and head of macro research EMEA at Goldman Sachs.

“It’s… not a deep recession, but it’s clearly been hit harder by obvious headwinds,” he added.

At the same time, Oppenheimer cited some positive reasons for Germany, stating that “the equity market has been holding up quite well and there are some bright spots, I think, in terms of activity in the economy.”

He also highlighted “opportunities” for Germany’s Mittelstand, or small and medium-sized businesses.

“Over the short term, we could see a rebound in the DAX along with a broader range of China-related assets,” Goldman Sachs wrote separately in a note. However, it cautioned that Chinese commerce may not offer the expected increase.

“Going forward, any increase in geopolitical tensions or reduction in global trade would impede German recovery,” the letter warned, as reported by CNBC.