Unaccelerated German economy – recession at the beginning of the year

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According to the latest data, economic output at the end of 2022 had fallen 0.5 percent from the previous quarter. According to economists, the German economy currently lacks momentum. According to the latest estimates, they expect very little growth for the whole of 2023 at best.

According to provisional figures, Germany narrowly escaped recession with a recession. If the gross domestic product falls for two quarters in a row, economists speak of a so-called technical recession. However, thanks mainly to the mild winter, the feared worst-case scenarios did not materialize – like a gas shortage that would leave deep scars.

According to statisticians, positive momentum came from investments and exports at the beginning of the year. Private consumption, on the other hand, could not support the economy.

Deutsche Bundesbank, in its updated monthly report, announced that the persistently high inflation at the beginning of the year had a negative impact on private consumption and consumer-related service providers. “However, the industry has recovered more strongly than expected.”

Lower energy prices could support energy-intensive production. In addition, supply bottlenecks in primary products continued to be resolved and demand increased noticeably.

The mood in the German economy got even brighter in April. Ifo business environment increased by 0.4 points compared to the previous month and became 93.6 points. “German companies’ concerns are easing, but the economy lacks dynamism,” said Ifo President Clemens Fuest.

According to “Economic Wise Men”, high inflation reduces the purchasing power of consumers, and worsening financing conditions due to rising interest rates slows down the economy. There is also a global economy that is only slowly recovering from the consequences of the coronavirus.

GDP is expected to increase by 0.2 percent this year, according to forecasts by the German Council of Economic Experts. The federal government now assumes a slightly stronger increase of 0.4 percent.

(SDA)

Source :Blick