- Data from the German statistics office on Thursday showed a downward revision of -0.3% from zero to GDP in the first three months of the year.
- Germany also recorded a 0.5% contraction in the last quarter of 2022.
Before sunrise, the residential buildings and office towers of the banking metropolis in Frankfurt are reflected in the calm flowing main river.
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The German economy entered a technical recession in the first quarter of this year as households tightened spending.
Data from the German statistics office on Thursday showed a downward revision of GDP (gross domestic product) from zero to -0.3% in the first three months of the year.
This comes after Germany posted a 0.5% contraction in the last quarter of 2022. Two consecutive quarters of negative growth defines a technical recession.
Europe’s largest economy is under significant pressure, particularly after Russia’s invasion of Ukraine and European leaders’ decision to cut ties with Moscow.
According to the statistics office, German households spent much less in the first quarter, with final consumption spending falling 1.2% over the period, as consumers held back on spending their money on clothes, decorations, cars and more.
“Germany fell into recession at the end of last year, above all, as the shock to energy prices weighed on consumer spending,” Klaus Vistessen, chief eurozone economist at Pantheon Macroeconomics, said in a note to clients.
He said it was unlikely that German GDP would continue to fall in the coming quarters, “but we don’t see a strong recovery either.”
Recent economic growth is taking place against a backdrop of high inflation and high interest rates across the region. The European Central Bank is expected to raise rates again at its next meeting on June 15. The central bank has raised its rates by 375 basis points since July.
German central bank governor Joachim Nagel said earlier this week that the ECB would need to raise interest rates “many” more. He is one of the worst members of the central bank.