Germany In Recession As Inflation, Higher Interest Bite

Germany fell into a recession around the turn of the year, official figures published Thursday showed, as inflation and higher interest rates curbed demand in Europe's largest economy

Berlin, (UrduPoint / Pakistan Point News - 25th May, 2023 ):Germany fell into a recession around the turn of the year, official figures published Thursday showed, as inflation and higher interest rates curbed demand in Europe's largest economy.

Over the first three months of 2023, the economy shrank by 0.3 percent, the federal statistics agency Destatis said, downgrading an initial estimate of zero percent.

Following a 0.5-percent contraction in the last three months of 2022, it was Germany's second consecutive quarter of negative growth -- the threshold for a "technical recession".

The slump came as Germany battled a surge in energy prices in the wake of the Russian invasion of Ukraine, which has weighed on households and businesses.

The increased cost of energy has driven inflation, which sat at 7.

2 percent in Germany in April, down only slightly from its peak towards the end of 2022.

"The persistence of high price increases continued to be a burden on the German economy at the start of the year," Destatis said in a statement.

The impact was felt particularly by consumers who reined in their spending on items such as food and clothing.

The negative revision to the growth figure was no surprise following a string of weak economic indicators, LBBW bank analyst Jens-Oliver Niklasch said.

"The early indicators suggest that things will continue to be similarly weak in the second quarter" of 2023, Niklasch said.

Industrial orders, which give a foretaste of factory output, plummeted in March when compared with the same month last year.