On the 25th (local time), Germany’s Federal Statistics Office and foreign media announced that Germany’s GDP growth rate in the first quarter was -0.3% reverse growth (tentative) compared to the previous quarter. Following a negative growth of -0.5% (fixed value) in the fourth quarter of last year, it continued to grow negatively for two consecutive quarters, falling into a technical recession.
The main reason for the reverse growth is private consumption, which fell 1.2% in the first quarter. The National Statistical Office said, “Individual households showed refraining from purchasing food and beverages, as well as clothing, shoes, and interior items compared to the previous quarter,” adding, “The purchase of new cars has also decreased.”
In the first quarter announcement a month ago, 0% was recorded unchanged, avoiding the judgment of a recession. There are objections to seeing negative growth for two consecutive quarters as technically unconditional entry into a “recession,” but it is clear that the situation is bad.
Household consumption fell 1.2% from the previous quarter on the back-to-back rate hikes by the European Central Bank (ECB) to curb inflation. Government spending fell by 4.9 percent. The ECB has raised its policy rate set by 3.75 percentage points since July last year.
Inflation in the 20 eurozone countries to which Germany belongs fell from 10.6% in October last year to 7.0% in April. German inflation was reported at 7.6% in April in statistical authorities in individual countries, but if adjusted to international standards such as the eurozone, it is more than 8%.
The Germany’s GDP was 1.8 percent last year, far below 3.5 percent of the eurozone’s total. The International Monetary Fund (IMF) predicted a 0.1% growth this year in its January forecast, but lowered it to minus 0.1% in April’s forecast, making it the only G7 to predict reverse growth.
It was contrary to the UK’s initial forecast of rising from minus 0.6% to plus 0.4%. The German government raised its initial forecast of plus 0.2% to 0.4% a month ago, but the situation has raised the possibility of lowering it again.
