German Economy Enters Recession with Consecutive Quarter of Contraction
Date
5/28/2023 2:46:19 AM
(MENAFN) Official data released by the Federal Statistical Office (Destatis) revealed that the German Economy contracted by 0.2 percent year-on-year in the first quarter of 2023, officially entering a recession. The country's gross domestic product (GDP) also declined by 0.3 percent on a quarterly basis. These figures indicate two consecutive quarters of negative growth, with declines seen in the last quarter of 2022 as well as the first quarter of 2023.
Economists and research institutes had already been warning about the possibility of a recession in Germany. Achim Wambach, the head of the ZEW Institute, stated last week that the German economy could experience a mild recession. The GfK research firm had also expressed doubts about Germany's ability to avoid a recession.
In addition to GDP figures, other economic indicators such as economic sentiment, retail sales, and production activities have been signaling the potential onset of a recession for some time. Destatis noted that households in Germany reduced their spending on food, beverages, clothing, and furnishing during the January-March period. The decrease in household purchases of new cars was attributed in part to the discontinuation of grants for plug-in hybrids and the reduction of grants for electric vehicles at the beginning of 2023.
The current economic downturn in Germany raises concerns about the state of the country's economy and its implications for the broader European and global markets. Policymakers and economists will closely monitor future data to assess the extent and duration of the recession, as well as to identify potential measures to stimulate growth and support the recovery of the German economy.
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