According to the BBC, ongoing inflation has caused Germany to experience a recession for the first three months of this year.
Germany GDP 2023 pic.twitter.com/FvHTXafj8u
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The collapse of Russian gas supply during the invasion of Ukraine hurt the largest economy in Europe.
According to the statistics agency, the economy shrunk by 0.3% between January and March.
This came after a 0.5% decline in the final three months of the previous year.
When an economy contracts for two consecutive three-month periods, a nation is said to be in a recession.
According to Andreas Scheuerle, an economist at DekaBank, “under the weight of extraordinary inflation, the German consumer has fallen to its knees, dragging the entire economy down with it.”
Inflation in Germany was 7.2% in April, higher than the eurozone average but lower than the UK’s 8.7%.
German families have been burdened by high prices, which has led them to make budget cuts for food, clothes, and furnishings. Additionally, there was a decline in industrial sales, which was a result of how expensive energy was for firms.
Household expenditure decreased by 1.2% over the prior quarter.
As a result of reduced government incentives for electric and hybrid vehicles, government spending was down 4.9%, and auto sales also decreased.
Given Germany’s significant reliance on Russian energy, the recession wasn’t as bad as some had anticipated. A mild winter and China’s economy’s reopening mitigated the effects of increasing energy costs.
Analysts stated that while private sector investment and exports increased, they were insufficient to remove Germany from the “danger zone” for recession.
“Early indicators suggest that things will continue to be weak in the second quarter of 2023,” said LBBU bank analyst Jens-Oliver Niklasch.
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