Status: 01/30/2023 10:55 a.m
The German economy is shrinking. In the fourth quarter, gross domestic product fell by 0.2 percent compared to the previous quarter. Experts had only expected stagnation.
According to the Federal Statistical Office (Destatis), gross domestic product (GDP) shrank by 0.2 percent from October to December compared to the previous quarter. Experts had only expected stagnation. “In particular, the price-, seasonally and calendar-adjusted private consumer spending, which had supported the German economy in the course of the year to date, was lower than in the previous quarter,” the statisticians explained.
In the previous summer quarter it was still enough for a growth of 0.5 percent. Compared to the same period of the previous year, GDP rose in the fourth quarter by 0.5 percent in real terms and by 1.1 percent in real and calendar terms.
Most experts are currently anticipating renewed contraction in the first three months of the year. If economic output then falls again, Germany would be stuck in a technical recession: this is what economists are talking about when there are two negative quarters in a row.
Slight growth in the current year
As Destatis further announced, price-adjusted GDP grew by 1.8 percent in 2022. Adjusted for prices and calendar effects, economic growth was 1.9 percent. The original result was thus revised downwards by 0.1 percentage points. In 2021, growth was 2.6 percent.
The slowdown in economic momentum at the turn of the year 2022/23 is likely to be shorter and milder than expected in autumn, according to the federal government’s annual economic report. For 2023, she expects slight growth of 0.2 percent, after having assumed a decline in gross domestic product of 0.4 percent last autumn.
“no crash”
For Alexander Krüger, chief economist at the private bank Hauck Aufhäuser Lampe, the economy has held up better than the leading indicators would have indicated: “Economic output has decreased, but there has been no economic crash.” Corona savings and the debt-financed stabilization measures of the federal government would have helped here. “Even if a recession will hardly go beyond technical aspects, there is no reason for growth euphoria,” said Krüger. Growing structural weaknesses led to the expectation that losses in prosperity would persist for years to come.
“The winter months are proving to be difficult, although not quite as difficult as originally expected,” agrees Thomas Gitzel, Chief Economist at VP Bank. “German GDP is likely to fall slightly again in the current quarter.”