He Germany’s GDP contracted for the second quarter in a row in the period January-March 2023, which confirms that the country entered a recession, according to the review of the Federal Statistical Office (Destatis), which placed the drop in activity in the -0.3%after the setback of -0.5% in the last quarter of 2022
“After GDP growth entered negative territory at the end of 2022, the German economy has now posted two consecutive negative quarters“, he claimed Ruth Brand, president of the Federal Statistical Office.
Thus, Germany registered the worst performance among the large economies of the eurozoneafter Spain and Italy grew by 0.5 and France by 0.2%, while the eurozone average was 0.1%.
Inflation was the negative factor for the German economyaccording to the Destatis analysis, which indicates that household consumption fell by 1.2% in the first quarter of 2023 due to strong price increases.
This greater reluctance of households to buy was manifested in the lower spending on food and beverages, clothing and footwear in the first quarter of 2023 compared to the previous quarter, while German families bought fewer new cars, likely due, in part, to the discontinuation of subsidies for plug-in hybrids and the reduction of subsidies for electric vehicles in early 2023.
Government final consumption spending also decreased considerably in the first three months of 2023with a contraction of 4.9% compared to the previous quarter.
On the contrary, the Office emphasizes that investment increased from the fourth quarter of 2022with an increase in gross fixed capital formation in construction (+3.9%), partly due to good weather during the first quarter of 2023, while gross fixed capital formation in machinery and equipment was also notably higher at the beginning of the year (+3.2%).
In addition, positive contributions from foreign trade were also recordedsince, compared to the fourth quarter of 2022, exports of goods and services increased by 0.4%. On the contrary, imports fell 0.9%due, in part, to the reduction in imports of mineral fuels, such as crude oil, derivatives, and chemical products.
On the other hand, Destatis indicated that the economic performance in the first quarter of 2023 was achieved with approximately 45.6 million people employed in Germany, which implies an increase of 446,000 workers (+1%) compared to the previous year.
On average, the number of hours worked per employee was similar to that of the first quarter of 2022 (-0.1%), while the volume of work in the economy as a whole increased by 0.9% in the same period.
The overall labor productivity (GDP corrected for prices per hour worked by employed persons) fell by 1% compared to the same quarter of the previous year and labor productivity per employed person was 1.1% lower in year-on-year terms.
(With information from Europa Press)
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