German Economy Stagnates in Q1

On Friday, , the Federal Statistical Office (Destatis) said that Germany’s economy stagnated in the first quarter (Q1) of 2023, with its gross domestic product (GDP) showing zero growth when adjusted for price, seasonal and calendar effects compared to the previous quarter.

RELATED: 

Strike By Aviation Security Workers In Germany

Analyzing the data of Destatis, Timo Wollmershaeuser, head of forecasts at the ifo Institute, said consumption and manufacturing send contrasting impulses for the German Economy.

“On the one hand, manufacturers are benefiting from easing supply bottlenecks as well as lower energy prices, and they are now on course for growth. On the other hand, high inflation is eroding the purchasing power of private households and causing consumption to shrink,” he said.

“The loss of purchasing power due to higher energy prices continues to weigh on the economy,” said Nils Jannsen, head of the German economic forecast division at the Kiel Institute for the World Economy (IfW Kiel).

The recovery of Germany’s labor market has also been slower than expected, said Andrea Nahles, chairwoman of the Federal Employment Agency (BA) when presenting the latest figures on Friday. “One of the reasons for this is the sluggish economy.”

The number of unemployed fell slightly to 2.586 million month-on-month in April, but that still meant 276,000 more people compared to last year’s figure. The country’s unemployment rate remained unchanged at 5.7 percent.

Earlier this week, the German government raised its outlook for 2023 as extensive relief measures such as a massive US$220 billion price subsidy package for electricity and natural gas had started to cushion companies and citizens from the impact of the energy crisis.

On the whole, the government expects a 0.4 percent GDP growth in 2023, up from 0.2 percent projected in late January. Next year, Germany’s economy is forecast to grow more strongly, by 1.6 percent.

Source link