Germany slips into economic recession as inflation rises

Considered Europe’s economic engine, Germany’s gross domestic product (GDP) data indicates that the country has entered a recession. To make matters worse, the first quarter of 2023 is still characterized by uncontrolled inflation in the country.

Under pressure, German Finance Minister Christian Lindner noted that GDP figures are surprisingly negative. The information is from Reuters.

It is worth remembering that in the fourth quarter of 2022, the German economy recorded a 0.5% decline in GDP. Data for the first quarter of 2023 shows a further decline of 0.3%, representing two consecutive periods of contraction in the German economy.

With the downturn in the German economy and high inflation, “local consumers are on their knees,” says banking analyst

An analyst at DekaBank, a German bank that started offering bitcoin products in 2023, indicates that the bad situation in Germany goes beyond bad GDP.

That’s because the country’s high inflation pressures consumers to stop buying, as everything has become more expensive. In other words, consumers are on their knees, analyst Andreas Scheuerle told Reuters.

Due to uncontrolled inflation, German household consumption fell by 1.2% in the first quarter of 2023. Under pressure, the government also cut spending by 4.9% in the first three months of the year.

Reasons that put pressure on Germany include the energy crisis caused by the war in Ukraine, the deterioration of the US economy, the recent increase in interest rates by central banks.

Going forward, the country with the greatest economic power in Europe expects a recovery in the second quarter, but the market is watching it closely.

Pressure on fiduciary economies and high inflation make bitcoin an option to protect assets?

There are several criteria for defining a recession, but a common definition is the occurrence of two consecutive quarters of GDP contraction. This means that the economy is contracting for a longer period of time, not just temporarily.

Recessions can have significant impacts on people’s lives, including rising unemployment, falling incomes, financial difficulties, reduced investment in infrastructure and public services, as well as challenges for businesses to continue operations.

Governments and central banks often implement economic stimulus measures, such as lowering interest rates, increasing government spending and tax breaks, in an effort to fight the recession and stimulate economic recovery.

With central banks raising interest rates, all indications are that measures to combat the current crisis remain scarce. In such a scenario, it is possible that bitcoin will emerge as an option to protect investors’ equity, as fiat economies have major problems controlling inflation and maintaining the purchasing power of the population.

In addition, decentralized digital currencies are not controlled by central banks, which is another plus point of the technology. Either way, in a global recession scenario, investors should redouble their care and try to protect themselves from the damaging effects of the crisis.

Source: Live Coins

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