According to data published this Tuesday by the German Federal Statistical Office, the country’s economy contracted 0.3% during the last quarter of 2023.

Among the factors that influence this contraction of Germany’s economy, compared to the previous quarter of 2023, are “persistent inflation, high energy prices and the weakness of foreign demand.”

Some analysts warn of a possible technical recession in Europe’s largest economy for the first quarter of this year.

As if this scenario were not worrying, this Tuesday the German Ifo institute, “an early indicator of the evolution of the German economy,” projected a “GDP fall of 0.2 % in the first quarter of 2024.”

Economist Alexander Krüger, from Hauck Aufhaeuser Lampe, has referred to German economic production, pointing out that during 2023 it did not exceed the level of four years ago. He added that “lack of growth is fashionable in this country.”

For his part, Thomas Gitzel, representative of VP Bank, stated that beyond the fact that the factors point to stagnation this year, there is a ray of hope through the relaxation of inflation.

M.Pino

Source: Finanzasdigital

(Reference image source: Maheshkumar Painam at Unsplash)

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Inflation and the energy crisis slowed down the German economy in the fourth quarter of 2022, which could lead to a recession in the first months of the new year, according to data from the Federal Statistical Office released on Monday.

The gross domestic product (GDP) contracted 0.2 % in the last three months of 2022 compared to the previous quarter, mainly due to the drop in citizen consumption. Initially, the Wiesbaden-based authority forecast stagnant GDP from October to December.

According to experts, economic output is likely to contract again in the first quarter of this year. If GDP falls for two quarters in a row, economists talk about a technical recession. “High inflation rates have driven the German economy into a winter recession,” said Ifo’s economics officer Timo Wollmershäuser.

Driven by high energy and food prices, inflation reached an annual average of 7.9 percent in 2022, the highest level since the founding of the Federal Republic.

Thomas Gitzel, chief economist at VP Bank, assumes that there will not be a serious collapse of the German economy. “However, there will be a slight recession, and German GDP is also likely to fall slightly again in the current quarter.”

At the end of 2022, consumer spending, which had supported the German economy following the end of most coronavirus restrictions, fell in price, seasonal and calendar-adjusted terms compared to the previous quarter.

“Consumers are not immune to the erosion of their purchasing power due to record inflation,” explained Jörg Krämer, Commerzbank’s chief economist.

Deutsche Bank’s chief economist for Germany, Stefan Schneider, also expects Europe’s largest economy to contract in the first quarter of 2023. “However, it will only really be a technical recession. That is, two consecutive quarters of GDP contraction, and not a decline in growth as was feared until recently.”

Source: dpa

(Reference image source: Norbert Braun, Unsplash)

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