Germany, the economic engine of Europe, enters recession

Germany, the economic engine of Europe, enters recession

First modification:

The Gross Domestic Product (GDP) of Germany decreased by 0.3% between January and March of this year, a figure that comes after the contraction of the last quarter of 2022 of 0.5%. It is the first time that this scenario has occurred since the Covid-19 pandemic, when a drop in GDP was recorded in the first and second quarters of 2020. Despite the slowdown, Berlin is confident that the situation will improve in the coming months .

The German economy has this requirement to consider a recession, after it accumulated red numbers in the last quarter of 2022 and in the first quarter of 2023; however, Economists at the Euro Zone Business Cycle Dating Committee use a broader set of information, including employment figures, to determine this scenario.

“Germany has experienced a technical recession and has been by far the worst performer among the main economies of the eurozone in the last two quarters,” Franziska Palmas, senior Europe economist for Capital Economics, told the AP news agency.

The GDP is the data that reflects the total value of the goods and services produced in a country, and although in economic theory it is considered as the data that accounts for the general panorama of a particular economy, for some experts the figure itself alone it is an indicator of how the country in question is prosperous, since it does not discriminate the types of expenses of the nation.

However, the figures that now put Germany in a recessionary scenario are a low blow for the German government, which only last month optimistically doubled its growth forecast for this year, motivated by the feared winter energy crisis that never arrive.

One of the explanations offered by the German Federal Department of Statistics (Destatis) is that this year’s quarterly contraction occurred as a result of the drop in consumption due to high inflation that put pressure on citizens’ pockets.

In April, annual inflation stood at 7.2% and although it is a figure that shows a consecutive deceleration from the 10% year-on-year in October, it still has not reached the levels it reached in July 2022 when it was 6.7% annual .

With Reuters and AP

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Written by Editor TLN

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