The German statistics office released final data this morning, which showed that GDP fell by 0.3% on a monthly basis. Stagnation was reported in the first assessment, compared to which the data reported in the second assessment can be said to be a major change.
Germany slipped back into recession after 2020 as the German economy contracted in the first quarter.
Because in the last quarter of last year, GDP fell by 0.5% on a quarterly basis. It should be noted that the GDP data for the fourth quarter has been significantly revised downwards compared to the first estimate in the final announcement at that time, and this, by definition, calls into question the accuracy of the following first estimates.
Germany is not the only one in recession in Europe, Hungary and the Baltic countries have also been in recession for several quarters. A downward revision of German GDP naturally raises the question of how the Eurozone average will change. According to current data from Eurostat, the currency area’s economy grew by 0.1% in the first quarter.
German GDP fell mostly due to consumption, with household consumption falling 1.2% in the first quarter as high inflation ate into the real value of wages. The German economy is one of the most exposed to Russian energy carriers, and the winter spike in energy prices hit them harder than average.
The prospects are mixed: with inflation moderating and energy prices falling, activity could pick up from the second quarter, but a big question is how much the ECB’s interest rate hikes will be scaled back in the second half of the year. economy.
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