Germany’s GDP decreased by 0.2%


Germany’s gross domestic product fell by 0.2% in the fourth quarter of 2022, affected by the energy crisis and inflation, according to a preliminary estimate announced on Monday, which is a less dangerous level than that expected.

“After surviving difficult conditions during the first three quarters, economic performance has declined slightly,” the national statistics institute Distatis said in a statement.

The statement pointed out that household consumption declined with the onset of the winter season, after it had stood firm throughout the year, which led to a contraction.

“A recession, at least for a short period of time, becomes more likely,” said Jens-Oliver Nikach, an analyst at LBW Bank.

In the event that a decrease in GDP is recorded in the first quarter of 2023 as well, the largest economy in Europe will enter a recession.

The energy crisis caused by the war in Ukraine has shaken the German economic model, which is based, in particular, on large-scale imports of gas at a good price from Russia.

The war halted Russian shipments, causing prices to rise in Europe for part of the year.

Inflation rates rose, and the costs of industrial production, which is the engine of German growth, raised fears of a major economic crisis in the country.

The government judged that despite the German economy’s downturn, it had generally weathered better than expected the impact of Russia’s invasion of Ukraine.

The German Minister of Economy, Robert Habeck, confirmed recently that in the event of a slowdown, it will be more moderate and shorter than expected, and that it will be compensated for with a return to growth starting in the spring, stressing that a serious economic crisis has been avoided.

The German Federal government currently expects growth of 0.2% over the course of 2023, rather than a recession.

Several factors contributed to its steadfastness, including the decline in energy prices, especially gas, in recent months due to a mild winter in Europe, and Berlin’s efforts to increase its supplies of liquefied gas.

Germany also spent large sums of money to support families, allowing the consumption movement to be maintained, which has regained its momentum since the beginning of 2022, following the lifting of restrictions imposed to combat the Covid-19 pandemic.

Share it...

Leave a Reply