ISTANBUL

The German economy is expected to contract by 0.1% in 2023, the Ifo institute said on Wednesday.

The country's GDP has increased by 1.8% in 2022, the institute recalled and said that it will probably expand by 1.7% next year.

The institute said the country's economy has been contracting since the end of 2022, after recovering quite strongly until late summer.

The average inflation rate is expected to be at 6.2% in 2023, down from 6.9%, the institute's data showed.

"High inflation rates are currently impacting consumer spending and construction activity through falling purchasing power and significantly increased financing costs," it said.