By Ed Frankl
The German economy entered a recession, after it contracted by more than in initial estimates in the first quarter, as household expenditure was squeezed by high inflation.
Germany’s gross domestic product contracted 0.3% compared with the previous three-month period, according to a second estimate released Thursday by German statistics office Destatis, lower than the first estimate, which showed the economy flatlined.
Economists polled by The Wall Street Journal had also a forecast of lack of growth.
The economy contracted by 0.4% in the fourth quarter of 2022, which means Germany has now entered a recession, typically meaning two quarters of negative growth.
“The persistence of high price increases continued to be a burden on the German economy at the start of the year,” Destatis said.
Households purchased fewer new cars and spent less on food and beverages, clothing and footwear in the first quarter of 2023 than in the previous quarter as wages didn’t catch up with inflation, Destatis added.
The German economy is set for sluggish growth this year, with the government in April predicting the economy to expand by 0.4%.
GDP in the first quarter contracted 0.5% compared with the same period a year earlier, on a price and calendar adjusted basis, Destatis said, again weaker than the forecast by economists polled by The Wall Street Journal and the first estimate of 0.1%.
Write to Ed Frankl at firstname.lastname@example.org
This article was originally published by Marketwatch.com. Read the original article here.