Germany slipped into recession at the start of the year, with Europe’s biggest economy shrinking by 0.3 percent in the first three months of 2023, official data showed.
The lackluster performance is the second straight quarter of negative growth after Germany shrank 0.5% in the final three months of 2022 as it grapples with an energy crisis triggered by Russia’s invasion of Ukraine.
Cuts in energy supplies from Russia since the outbreak of war have sent prices soaring, fueling inflation and weighing on the economy.
According to Destatis, the impact of higher prices was felt particularly strongly by consumers in the first quarter of 2023 as they curbed their spending on goods such as food and clothing. Germany, which has long been heavily dependent on energy imports from Russia, is particularly vulnerable after the Russian invasion.
“The recession was weaker than some early forecasts made at the start of the conflict, but the mild winter weather and the easing of supply chain problems following the Covid pandemic were not enough to lift the economy out of the recession danger zone,” Karsten said.
Brzeski, head of the “Macro” department at ING Bank, writes BGNES. Germany’s most recent recession came as the Covid pandemic gripped Europe in early 2020 and prompted governments to effectively shut down large parts of the economy.