Germany’s central bank issued a report on Monday that included a warning that the nation’s struggling economy would contract much more in the first quarter of 2024.

The forecast indicates that Germany’s external industrial demand is likely to stay weak, consumers will likely continue to be frugal with their spending, and the high borrowing rates will further hurt domestic investment.

““There is still no recovery for the German economy… Some stress factors will probably remain in the first quarter of 2024… economic output will therefore again show a slight decline. With the second consecutive decline in economic output, the German economy would be in a technical recession,”, the Bundesbank stated, referring to the last quarter of 2023, when the GDP of the nation shrank by 0.3% annually.

One explanation for Germany’s poor economic performance is the impact of the energy crisis that hit the nation following the outbreak of hostilities in Ukraine, according to analysts. The bloc mostly lost access to inexpensive Russian energy as a result of the multiple economic sanctions imposed by Western nations on Russia. The heavily industrialized German economy, which is currently experiencing its fourth consecutive quarter of negative or zero growth, was particularly hard hit by that.

Only Germany’s economy shrank in the previous year out of al of the G7 economies. Experts, notably those at Deutsche Bank and Commerzbank, the two biggest lenders in the nation, have forecasted that 2024 will see another downturn.