German economy slips into recession-Xinhua

German economy slips into recession

Source: Xinhua| 2023-05-25 23:53:30|Editor: huaxia

BERLIN, May 25 (Xinhua) -- Following a 0.4 percent contraction in the fourth quarter of 2022, Germany's gross domestic product (GDP) declined by a further 0.3 percent in the first quarter of 2023, statistics showed on Thursday, indicating the country's economy already slipped into recession.

A recession is defined as two consecutive quarters of economic contraction.

"The persistence of high price increases continued to be a burden on the German economy at the start of the year," the Federal Statistical Office (Destatis) said. Inflation stood at 8.7 percent in the first two months of 2023, then slowed to 7.4 percent in March.

As a result, Germans have become increasingly reluctant to spend. In the first quarter, household consumption was down 1.2 percent quarter-on-quarter. This affected food, clothing, and new car sales, as the government reduced the purchase premiums for electric cars at the turn of the year.

"Positive contributions" still came from foreign trade as Germany's exports of goods and services rose slightly by 0.4 percent compared with the previous quarter, with plastics and fabricated metal products registering "particularly robust growth," according to Destatis.

At the end of March, the German Council of Economic Experts still expected the country's economy to grow by 0.2 percent this year and by 1.3 percent in 2024.

"The short-term outlook for the German economy has improved slightly as the supply of energy has become more stable and wholesale prices have declined," the council said.