2023-05-25 11:33:19
Europe’s largest economy is idling. I’Germany entered a technical recession in the first quarter of 2023, with a second consecutive drop in its gross domestic product (GDP), weighed down by its industry which is suffering from a drop in demand, against a backdrop ofinflation and rising interest rates.
The GDP of Europe’s largest economy fell 0.3% between January and March over one quarter, after a decline of 0.5% between October and December, in data adjusted for seasonal and calendar variables, indicated the Destatis Institute in a press release.
Over one year, the indicator fell by 0.5%.
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The country is therefore entering a technical recession, after two quarters of decline in a row. This is a first since the coronavirus pandemic, which caused a drop in GDP in the first and second quarters of 2020.
Drop in industrial orders
The German economy seemed to hold up better than expected at the start of the year, with the contained effects of the energy crisis thanks to massive aid, increased use of liquefied gas and the start of a drop in gas prices.
But inflation, which remains very high at more than 7%, finally considerably reduced private and public consumption expenditure, which weighed on this dynamic.
And policy rate hikes led with a bang by the European Central Bank (ECB) to combat it are beginning to have an effect on activity, by compressing demand.
Result: after several months of increase, the production of the manufacturing sector, central to the German economic model, started to fall again in March, falling by 3.4% over one year.
Industrial orders also fell sharply in March, by 10.7%, unheard of since the trough of the pandemic. And exports, essential for this sector, fell sharply to 5.2%.
Despite this slowdown, the German government expects a gradual recovery in activity during the year, with growth of 0.4% in 2023.
With Archyde.com and AFP
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