German Economy Enters Recession In The First Quarter Of The Year
(CTN News) – There was a contraction in the German economy in the first quarter of 2023 compared to the previous three months, bringing the country into recession, data from the statistics office revealed on Thursday.
According to a second estimate, the gross domestic product for the third quarter fell by 0.3% after adjusting for price and calendar effects for the quarter.
The fourth quarter of 2022 saw a decline of 0.5%, following a decline of 0.4% the previous quarter.
It is commonly accepted that two consecutive quarters of contraction constitute a recession.
It was reported that the GDP had stagnated in the first quarter, and that Germany had avoided a recession, according to the first estimate.
The GDP for the second quarter of 2007 decreased by 0.5% year-over-year after adjusting for changes in prices and calendar effects.
It was announced this week by Andreas Scheuerle, an analyst at DekaBank, that the German consumer has fallen to his knees under the weight of massive inflation, dragging down the entire economy with him.
As a result of price, seasonal and calendar adjustments, household consumption dropped by 1.2% quarter-on-quarter. The government’s spending also decreased significantly by 4.9% on a quarterly basis.
As ING’s global head of macro Carsten Brzeski pointed out, even the warm winter weather, a rebound in industrial activity, aided by China’s reopening, and an easing of supply chain frictions, were not enough to pull the economy out of the recessionary danger zone.
In contrast to the second half of 2022, the first three months of this year have seen an increase in investment after a rather weak second half of the previous year.
Machine and equipment investments increased by 3.2% compared with the previous quarter, while construction investments increased by 3.9%.
In addition, there were positive contributions from trade. Imports decreased by 0.9%, while exports increased by 0.4%.
During the winter half-year, energy prices rose at a staggering rate, according to Commerzbank’s chief economist Joerg Kraemer.
There was no way to avoid a recession, and the question now is whether the economy will recover in the second half of the year.
As the year progresses, the optimism at the beginning of the year seems to have given way to a more realistic outlook, according to ING’s Brzeski.
Weak economic activity can be attributed to a drop in purchasing power, thinned-out industrial order books, aggressive monetary policy tightening, and a slowdown of the US economy.
According to Kraemer from Commerzbank, following Wednesday’s decline in the Ifo business climate, all key leading indicators in the manufacturing sector have now declined.
According to a monthly economic report published on Wednesday, the German Bundesbank expects the economy to grow modestly in the second quarter due to a rebound in industry.
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