Germany slipped into recession after its economy shrank in the first three months of 2023, marking the second quarter of contraction, country’s statistical office said on Thursday.
The gross domestic product (GDP) of Europe’s largest economy declined by 0.3 per cent in the period from January to March. It follows a drop of 0.5 per cent in Germany during the last quarter of 2022.
Initial estimates had indicated that the GDP would remain stagnant at zero growth, which raised hopes among people that Germany could possibly escape a recession.
Two consecutive quarters of contraction is a common definition of recession.
The negative growth figure for this quarter was revised down by the federal statistics agency from an initial estimate of zero per cent.
What have pushed prices up?
Declining supplies of energy from Russia have pushed prices up, leading to inflation.
Household consumption dropped to 1.2 per cent quarter-on-quarter after price, seasonal and calendar adjustments.
The recession is said to be less severe than some of the early predictions made in the beginning of the conflict, however, mild winter weather and the easing of supply chain problems following the Covid pandemic were “not enough to get the economy out of the recessionary danger zone”, news agency AFP quoted Carsten Brzeski, head of macro at the ING bank, as saying.
Germany’s inflation rate stood at 7.2 per cent in April, above the euro area’s average but below the UK’s 8.7 per cent.
With inputs from agencies
Europe’s largest economy succumbs, Germany declares recession