Negative GDP for two quarters – Corriere.it

The German economy slipped into recession during the winter, with gross domestic product down by 0.3% in the first three months of the year compared to the previous quarter. He communicates it the Federal Statistical Office Destatis. In a first estimate, the authority had still assumed a stagnation of the economic trend for the first quarter.

After GDP had already slipped into negative territory at the end of 2022, the German economy thus recorded two negative quarters in a row, tosays Ruth Brand, president of Destatis. If economic output falls for two consecutive quarters, economists speak of a technical recession. That doesn’t mean, however, that the whole year is bad. Thanks largely to a mild winter in Germany, worst-case scenarios, such as a gas shortage, would have left deep scars on the economy. Private consumption failed to support the economy in the face of high inflation rates. According to new data, private households spent less on food and drink, clothing, shoes and furniture in the first quarter of 2023 than in the previous quarter. For consumers, high inflation is a challenge as it erodes their purchasing power, as people can afford less with every euro. Although the upward trend in prices has weakened recently, the annual inflation rate of 7.2% recorded in April was still relatively high.

The Bundesbank, in the monthly report published todayargues that after the stagnation at the beginning of the year, the German economy will return to growth in the coming months, defining slight growth in German GDP is likely in the second quarter. Easing supply bottlenecks, a high order backlog and falling energy prices are helping to continue the sector’s recovery. This should also support exports, not least because the global economy has regained some momentum.
The Bundesbank continues to expect a limited boost from private consumption, which failed to support the economy in the first three months of the year due to inflation. Inflation remains high: therefore, it is probable that private consumption will stagnate, writes the German Central Bank, which forecasts that the inflation rate will decrease only very gradually, due to the increase in the prices of non-energy components, especially food, which remain extraordinarily high. Yesterday, Bundesbank President Joachim Nagel confirmed that several more interest rate hikes by the ECB would be needed to control inflation over the long term.