At the end of last year, the German economy developed worse than initially estimated. The Federal Statistical Office announced that the gross domestic product (GDP) fell by 0.4% in the fourth quarter of 2022 compared to the previous quarter. In a first estimate, the authority still assumed a decline in economic output of 0.2 percent.
In the last quarter of 2022, high inflation weighed mainly on private consumption, which had initially sustained the economy over the last year after the end of corona restrictions. As in the previous two quarters, construction investments declined in terms of price, seasonality and timing. Investments by companies in equipment such as machinery, equipment and vehicles also fell.
According to economists’ estimates, the Gross Domestic Product should also shrink in the first quarter of this year. “Economic output is likely to be lower again in the first quarter of 2023 than in the previous quarter,” wrote the Deutsche Bundesbank in its current monthly report. This would have sent Germany into a winter recession: if gross domestic product falls for two consecutive quarters, economists talk of a technical recession.
Because the State is relieving individuals and companies with billions of euros in the event of a sharp rise in energy costs, some economists now expect slight economic growth for the year as a whole. The German government recently raised its economic forecast for this year.