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Gross domestic product fell by 0.3% for the quarter when adjusted for price and calendar effects, the data showed, marking the country’s slide into recession. This follows a 0.5% contraction in the last three months of 2022, as Germany battled an energy crisis unleashed by Russia’s invasion of Ukraine.
Two successive quarters of contraction is what commonly defines a recession.
The negative growth figure for this quarter was revised down by the federal statistics agency from an initial estimate of zero percent.
Dwindling energy supplies from warring Russia have pushed prices up, stoking inflation. Household consumption dropped to 1.2% quarter-on-quarter after price, seasonal and calendar adjustments.
The recession was less severe than some early predictions made at the start of the conflict, but mild winter weather and the easing of supply chain problems following the Covid pandemic were “not enough to get the economy out of the recessionary danger zone”, Carsten Brzeski, head of macro at the ING bank, told AFP. By contrast, investment was up in the first three months of the year, following a weak second half of 2022. There were also positive contributions from trade.Germany’s last recession came as the coronavirus pandemic swept through Europe at the start of 2020, prompting governments to effectively shut down large swathes of the economy.
With inputs from Reuters, AFP
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