The German economy started the year 2023 weakly. According to an initial estimate by the Federal Statistical Office, the gross domestic product (GDP) stagnated in the first quarter compared to the previous quarter, as the Wiesbaden authority announced on Friday. Bank economists had expected economic output to grow by 0.2 percent on average.
At the end of 2022, economic output had decreased by 0.5 percent compared to the previous quarter (previously minus 0.4 percent) according to revised data. According to economists, the German economy is currently lacking momentum. For 2023 as a whole, according to the latest forecasts, they expect little growth at best.
Germany narrowly avoids recession
According to the provisional figures, Germany narrowly avoided a recession with the stagnation. If the gross domestic product falls two quarters in a row, economists speak of a so-called technical recession. However, mainly thanks to the mild winter, the worst feared scenarios did not materialize – such as a gas shortage that would have left deep scars.
According to the statisticians, positive impetus came from investments and exports at the beginning of the year. Private consumption, on the other hand, failed to support the economy.
The Deutsche Bundesbank explained in its current monthly report that persistently high inflation had a negative impact on private consumption and consumer-related service providers at the beginning of the year. “However, the industry recovered more strongly than expected.” The energy prices, which have fallen again, have supported energy-intensive production. In addition, the supply bottlenecks for primary products have continued to dissolve, and demand has increased noticeably.
Mood brightens in April
The mood in the German economy brightened further in April. The Ifo business climate rose by 0.4 points to 93.6 points compared to the previous month. “German companies are less concerned, but the economy is lacking momentum,” said Ifo President Clemens Fuest.
According to the “Economic Wise Men”, high inflation is reducing the purchasing power of consumers, and poorer financing conditions due to rising interest rates are also slowing down the economy. In addition, there is a global economy that is only slowly recovering from the consequences of the corona virus. According to estimates by the German Council of Economic Experts, GDP is likely to grow by 0.2 percent in the current year. The federal government is now assuming a slightly stronger increase of 0.4 percent.
Federal Minister of Economics Robert Habeck (Greens) sees a gradual recovery in the economy. “After the Corona crisis, the German economy is proving to be adaptable and resilient, even in the energy crisis,” said Habeck when presenting the current economic forecast. (dpa)