Data from the German Federal Statistical Office released today, Thursday, shows that Germany's economy shrank slightly in the first quarter of 2023 compared to the previous three months, thus entering a state of recession.
The data indicated that the Gross Domestic Product (GDP) declined by 0.3 percent when adjusted for price and calendar effects. This follows a decrease of 0.5 percent in the fourth quarter of 2022. Recession is generally defined as two consecutive quarters of contraction. Preliminary estimates showed that GDP in the first quarter experienced a downturn, indicating that Germany barely avoided recession.
The Statistical Office noted that inflation still poses a burden on the German economy at the beginning of the year. This was reflected in household consumption, which fell by 1.2 percent on a quarterly basis after adjustments for price, seasonal, and calendar factors. In contrast to this trend, investment increased in the first three months of the year after being weak in the second half of 2022. Additionally, trade also contributed positively.
