The German economy has contracted more strongly than expected in the last three months of 2022, with inflation and the energy crisis taking a toll on household consumption and investment.
The German Gross Domestic Product (GDP) shrank by 0.4% in the fourth quarter of last year compared with the previous three months, the country’s statistics office said on Friday (24).
Preliminary data had previously pointed to a quarterly contraction of 0.2%, adjusted for price and calendar effects. In the third quarter, the German GDP had a slight growth of 0.5% compared to the previous three months.
The second consecutive decline in the current situation component of the Ifo institute’s confidence survey, the decline in the manufacturing PMI, weak consumer confidence and willingness to spend near historic lows point to a contraction of the German economy once again in the first quarter 2023, said ING’s global head of macroeconomics, Carsten Brzeski.
The worse-than-expected final result for fourth-quarter GDP raises fears of a German winter recession. A recession is commonly defined as two successive quarters of contraction.
“Today’s figures show that the sharp rise in energy prices has visibly slowed the economy despite extensive government aid measures,” said Commerzbank economist Ralph Solveen.
With monetary policy tightening globally, Solveen said there is unlikely to be a noticeable economic recovery.
After the end of relief measures such as a fuel discount and a €9 transport voucher, consumers in Germany spent less in the fourth quarter than in the third, the statistics office said.
Household spending was down 1.0%, while government spending was up 0.6% from the previous quarter.
Source: CNN Brasil
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