Germany, Italy GDP will fall below pre-Covid level, Moody’s says

GERMANY, Italy and Slovakia will all see their gross domestic product (GDP) fall below pre-pandemic levels in 2023, according to economists at Moody’s Investors Service.

Predicting a negative outlook for sovereign creditworthiness in the eurozone this year, the ratings company said that the region faces a “mild recession.”

“Support measures at the national and European Union level and easing disruption to global supply chains will soften some of these effects,” Heiko Peters, vice-president senior analyst at Moody’s, said on Monday (Jan 16) in a press release. “But we still forecast 60 per cent of euro area sovereigns will be in recession.”

Germany avoided a slump in the fourth quarter that had been previously projected by officials, according a tentative estimate on Friday. The gloomy outlook from Moody’s suggests that such surprisingly resilient performance won’t endure.

Stagflation, if it subsequently emerges, could have “severe” credit consequences for some southern European countries, Moody’s said. BLOOMBERG