German economy stagnates in first quarter of 2023

Berlin, April 28, (dpa/GNA) – German gross domestic product (GDP) stagnated in the first quarter of 2023 compared to the previous quarter, the Federal Statistical Office announced in a first estimate on Friday, meaning Europe’s largest economy narrowly missed falling into recession.

At the end of 2022, economic output fell by 0.5% compared to the previous quarter, the latest data showed.

According to economists, the German economy is currently lacking momentum. The latest forecasts call for only slight growth at best for 2023 as a whole.

If the gross domestic product falls for two quarters in a row, economists speak of a so-called technical recession. Thanks mainly to the mild winter, however, the worst-feared scenarios did not materialize – such as a gas shortage that would have left deep marks.

Positive impulses came from investments and exports at the beginning of the year, the statisticians said. Private consumption, on the other hand, failed to support the economy.

The German Bundesbank explained in its current monthly report that the persistently high inflation burdened private consumption and consumer-related service providers at the beginning of the year. “However, industry recovered more strongly than expected.”

Lower energy prices had supported energy-intensive production. In addition, the supply bottlenecks for intermediate products had continued to ease and demand had picked up noticeably.

The mood in the German economy had brightened further in April. The Ifo business climate rose by 0.4 points to 93.6 points compared to the previous month. “The concerns of German companies are easing, but the economy lacks momentum,” Ifo President Clemens Fuest said.

In the current year, GDP is expected to grow by 0.2% according to the German Council of Economic Experts. The government meanwhile assumes a somewhat stronger plus of 0.4%.

Economy Minister Robert Habeck sees a gradual recovery in the economy. “After the coronavirus crisis, the German economy is also proving to be adaptable and resilient in the energy crisis,” Habeck said when presenting the current economic forecast.

In other economic news released by the Federal Employment Agency on Friday, the number of unemployed in Germany fell only slightly in April to 2.586 million, around 8,000 fewer than in March, but 276,000 more than in April 2022. The unemployment rate remained unchanged at 5.7% in April.

“The spring revival on the labour market remains weak in April. One of the reasons for this is the sluggish economy. Overall, however, the labour market is in a stable condition,” agency chairwoman Andrea Nahles said.

For its statistics, the Federal Employment Agency used figures available up to April 13.

Last year, the number of unemployed in April had dropped by a much more significant 53,000 compared to the previous month.

The agency attributed the significant year-on-year increase in part to the inclusion of Ukrainian refugees in the statistics. “Even without the inclusion of Ukrainian refugees, unemployment would have risen year-on-year, but less sharply,” the agency added.

GNA

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