Germany in recession: GDP down 0.3%
The German economy slipped into recession over the winter, with gross domestic product down 0.3% in the first three months of the year compared to the previous quarter. This was communicated by the Federal Statistical Office Destatis. In an initial estimate, the authority had once again 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," says 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 full 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 has 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.