Data reveals Germany has entered recession — RT Business News
Germany’s gross domestic product (GDP) has fallen for two consecutive quarters, according to figures released by the Federal Statistical Office (Destatis) on Thursday, meaning the country has entered a recession.
First-quarter production fell 0.3% from the previous three months, after falling 0.5% between October and December, Destatis said, noting that its initial estimate, released last month, was for a stagnation or 0% growth.
High inflation has persisted in what is Europe’s biggest economy, forcing Germans to spend less, the statistics office said. In January and February this year, the consumer price index stood at 8.7%, falling slightly to 7.2% in April, according to official data. This remains well above the central bank’s medium-term inflation target of 2%.
Energy and food prices in particular have shown above-average growth since the start of the conflict in Ukraine and have become the main contributors to Germay’s high inflation rate, Destatis explains.
“Household reluctance to buy manifested itself in a variety of areas: households spent less on food and beverages, clothing and footwear, and furnishings in the first quarter of 2023 than in the previous quarter,” the release reads.
Chancellor Olaf Scholz ruled out a possible recession in January, despite the economic impact of Western sanctions on Russia.
“I am absolutely convinced that it will not happen that we enter a recession”, he said in an interview with Bloomberg TV. “We have shown that we are capable of reacting to a very difficult situation.”
Germany lagged behind other major EU member states and the EU as a whole in terms of economic development in the first quarter of this year. The EU as a whole recorded growth of 0.2% between January and March.
The country’s central bank, the Bundesbank, said on Wednesday it expects the economy to grow “modestly” in the current quarter, thanks to a rebound in industry in a context of the order book and falling energy costs, which should offset the stagnation in household consumption.
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