The German economy entered a technical recession in the first quarter of 2023 after suffering a contraction of 0.3%, the second consecutive drop in its Gross Domestic Product (GDP) after the one experienced in the last quarter of last year, which was of 0.5% This is the scenario drawn by the final data published this Thursday by the Federal Statistical Office (Destatis), which had first pointed to a mere stagnation for the months of January to March that would have allowed the category of technical recession to be avoided, that is, the accumulation of two consecutive quarters of negative GDP growth.
This situation occurs in Germany for the first time since the coronavirus pandemic, which caused falls in GDP in the first and second quarters of 2020. In fact, the German economy seemed to be resisting the blows derived from the Russian invasion better than expected of Ukraine and the consequent energy emergency due to the cut off of Russian gas, which it has addressed with million-dollar aid to the industry and is committed to liquefied natural gas and other supply routes. The leading economy in Europe closed the year 2022 with a GDP increase of 1.8% compared to 2021.
However, inflation remains very high, with 7.2% year-on-year in April, which has implied a rise in prices and has therefore led to a drop in both private and public consumption over several months. “After the GDP fell into the red at the end of 2022, the German economy now registers two negative quarters in a row,” confirmed Ruth Brand, president of Destatis, in the statement issued on Thursday.
There are, however, positive data, such as exports, which registered an increase of 0.4% in the first quarter compared to the last quarter of 2022. The Federal Statistical Office notes a recovery in construction, industrial equipment, and production of machinery, household appliances and automobiles. Imports fell by 0.9%, with a particular decrease in fuels, minerals and chemical products.
The German economy thus registers the worst performance among the large economies of the euro area, since Spain and Italy grew by 0.5% and France, by 0.2%, while the average for the euro area was 0.1%. .
Despite this slowdown, the German government forecasts a gradual recovery in economic activity this year, which Chancellor Olaf Scholz and Vice Chancellor and Economy Minister Robert Habeck hope will close with growth of 0.4 % of GDP.
