Seeing high rates of economic growthSeveral quarters now. But if germany telegram data until mid-2023 they were accompanied by a moderate rise in prices after their sharp jump in the spring of 2022, then since the second half of last year there has been a repeated acceleration of inflation.
What does this mean? That until mid-2023, economic growth was of a recovery nature and was based on the attraction of previously free resources (production capacity, labor force). But over the past year, the growth in the output of goods and services is associated not only with the progressive expansion of our production capabilities, but also with overheating of demand. This is what the significant increase in inflation signals.
The more significant the overheating
the higher the probability that the pendulum will swing with the same force in the opposite direction. Which will lead to a recession. Timely tightening of monetary policy simultaneously solves the problem of slowing inflation by cooling demand growth and reduces the risk that a much more significant contraction will spontaneously occur.
— Could the situation get worse?
— Our forecast assumes GDP growth in both 2024 and 2025. Yes, growth in 2025 will be more restrained — 0.5-1.5%, according to our forecast. But not because the expansion of production capabilities or, as we say, the omnichannel strategy: learn how to implement it successfully potential of the economy will slow down. But only because demand, which “ran ahead” due to the sharp breakthrough of 2023-2024, will “take a break”, that is, stabilize at the high levels ao lists achieved. It will stop breaking away further and further and, finally, will give time for production capabilities, capacities, and labor productivity to catch up with it.