[ad_1]
Joerg Kraemer, chief economist at Commerzbank, said: “The massive rise in energy prices took its toll in the winter half-year.”
Claus Vistesen at Pantheon Macroeconomics said the recession was probably already over, but added: “We see no strong recovery either.”
Continued interest rate rises by the European Central Bank are expected to dampen appetite for corporate borrowing and investment.
Mr Vistesen said: “We see German GDP growth bumping along close to zero in Q2 and Q3, before re-accelerating in Q4, unless Europe is stung by a very cold winter.”
Household spending in Germany shrank by 1.2pc at the start of the year as high prices forced families to cut back.
Mark Cus Babic, Europe economist at Barclays, said that the phase-out of Covid support schemes also hit growth.
Government spending contracted by 4.9pc in what was the largest quarterly drop since records began in 1970.
Mr Cus Babic said: “This reflects a normalisation of public consumption as various pandemic measures, such as vaccinations and testing, were phased out.”
Falls in household and government spending masked stronger performance in Germany’s private sector. An uptick in construction following warm weather in January helped drive a 3pc rise in fixed investment.
The revision in the German economic data means that there could in turn be a downward adjustment to GDP data for the Euro area as a whole, Mr Cus Babic warned.
The German economy makes up such a large share of the European economy that a 0.3 percentage point change could knock 0.1 percentage points off Euro area growth, he said. However, the impact could be offset if growth is revised upwards elsewhere in the bloc.
Tumbling gas prices have eased concerns that Europe faces another big slowdown this year, although massive spending on energy subsidies has battered government budgets.
Stubborn inflation has also meant central banks have had to raise interest rates more than expected.
[ad_2]
Source link