The German economy slipped into recession at the beginning of the year. Compared to the last quarter of last year, the volume of gross domestic product (GDP) shrank by 0.3 percent, according to data published today by the German statistical office Destatis.
If the economic activity shrinks for two quarters in a row, economists are talking about a technical recession.
“After the GDP had already slipped into negative territory at the end of last year, the German economy thus had two negative quarters in a row,” President Destatis recalled, according to the German news agency DPA Ruth Brand. In the last quarter of last year, the volume of GDP decreased by 0.5 percent.
The figures published today are worse than the original estimates, which predicted stagnation. At the same time, statisticians emphasized that in the case of a harsh winter, the worst-case scenarios could occur, such as gas shortages, which would leave deep scars in the German economy.
As they also stated, private consumption in the face of high inflation failed to support the economy. While the trend of price growth has slowed recently, the country still experienced a relatively high annual inflation rate in April, i.e. 7.2 percent.
According to the latest data, in the first quarter of this year German households spent less on food and drink, clothing and footwear, and home furnishings compared to the previous quarter.
On the other hand, exports and investments made a positive contribution to the economy at the beginning of the year. Due to the favorable weather, the volume of construction work increased as well as the investment of companies in equipment such as machines, devices and vehicles.