Data from the Federal Statistical Office (Destatis) has shown that the German economy shrunk by 0,3 percent in the first quarter of 2023, meaning the federal republic has now entered a technical recession.
According to the most recent figures published by Destatis, German gross domestic product (GDP) fell by 0,3 percent in the first quarter of 2023. Since the final quarter of 2022 saw a 0,5 percent drop in German GDP, the country has now entered a technical recession, meaning it has recorded two consecutive negative quarters.
It was originally predicted that Germany would manage to escape a recession by the skin of its teeth and GDP would stagnate at zero percent growth in the first quarter of 2023.
Destatis added that reduced but still high inflation rates are continuing to weigh heavy on the German economy. In April, the inflation rate in Germany sank to its lowest level since August 2022 but was still at a high 7,4 percent. At the end of March 2023, goods and services cost 7,4 percent more than during the same period of the previous year.
With high inflation rates and largely the same wages recorded before inflation rates shot up, German consumers don’t hold as much purchasing power. In the first quarter of 2023, households spent less money on food, clothes and furniture than they did in the final quarter of 2022.
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