German engine stuck: Germany is in a technical recession

Germany is officially in recession: GDP in the first quarter of 2023 recorded a minus sign (-0.3%), as in the last part of 2022 (-0.5%). Economists speak of a “technical recession” when gross domestic product shrank for two consecutive quarters. This happened to Italy in 2018, for example. The Germans have experienced this nine more times in the past. Nothing tragic, but still an alarming sign. It’s not just for Berlin: Experts say if Germany’s engine breaks down, the slowdown could affect other EU countries, including ours.

Looking at Germany, the first reason for alarm is that the forecasts in recent months have been more optimistic: the country managed to survive the more gloomy economic scenarios after the war in Ukraine and the cessation of Russian gas supplies from Berlin. quite dependent. Most economists ruled out the possibility of a technical recession between autumn and winter, thanks to the firepower of its coffers, which gave half of the EU-wide state aid between the pandemic and the energy crisis.

The first stuck was consumption. As the statistics office Destatis explained, household consumption fell 1.2% in the first three months of this year. Spending on food, clothing and new cars, a sector that also discounts the incentive cut for electric vehicles, was hit. Commerzbank chief economist Jorg Kramer predicts that Germany will not emerge from the recession even in the second half of the year. “Unfortunately, no fundamental improvement is foreseen – all major leading indicators in the manufacturing sector are now falling,” he tells Welt.

Source: Today IT

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