The German economy has been shrinking for two quarters in a row – this suggests a technical recession of the largest economy in the European Union.
About this, as he writes “European Truth”reports Spiegel with reference to the latest data from the Federal Statistical Office.
Gross domestic product (GDP) contracted by 0.3% from January to March compared to the previous quarter and thus the economy contracted for the second quarter in a row.
If two quarters in a row are negative, then they speak of a technical recession.
“The often-used criterion for a technical recession has been met. Massive increases in energy prices took their toll in the winter months,” said Joerg Kremer, chief economist at Commerzbank.
Economic growth slowed down due to reduced private consumption. It fell 1.2% in the first quarter. One reason for this is probably the loss of purchasing power by consumers due to high inflation. Government consumption also fell by 4.9%. On the other hand, a positive impetus was provided by investments, which grew by 3.9%. Foreign trade also supported the economy.
At the same time, a significant rise is not yet predicted. The Bundesbank expects at least slight growth in the spring. “In the second quarter of 2023, economic production should increase slightly again,” the current monthly report says. Elimination of bottlenecks in supply, a large portfolio of orders and low energy prices should ensure the recovery of the industry.
“This should also support exports, especially given that the global economy has resumed some momentum,” the Bundesbank expects.
The federal government expects GDP growth of 0.4% this year. A stronger growth of 1.6% should occur in 2024. For comparison: last year the growth was 1.8%.
As reported, the European Commission recommended to all EU governments end energy price support measures before the end of this year to keep public finances in check and comply with proposed new fiscal rules in 2024.
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2023-05-25 08:07:42
