June 10, 2023

Athens News

News in English from Greece

Recession in the EU’s largest economy

The German economy has been shrinking for two quarters in a row, suggesting a technical recession of the largest economy EU.

About it informs Spiegel, referring to the latest data from the Federal Statistical Office. From January to March this year, the gross domestic product contracted 0.3% quarter-on-quarter, marking the second quarter in a row the economy has contracted. And if two quarters in a row are negative, then they talk about a technical recession. Joerg Kremer, Chief Economist at Commerzbank, states:

“The often-used criterion of a technical recession has been met. Massive increases in energy prices took their toll in the winter months.”

Economic growth slowed down due to a reduction in private consumption, which fell by 1.2% in the first three months of 2023. One of the reasons for this, experts say, is the loss of purchasing power by consumers due to high inflation. State consumption also decreased by 4.9%. On the other hand, a positive impetus was provided by investments, which grew by 3.9%. Foreign trade also supported the economy.

However, experts do not yet predict a significant rise. The Bundesbank, as stated in the current monthly report, expects a slight increase in the spring:

“In the second quarter of 2023, economic production should increase slightly again.”

Industrial recovery should ensure the removal of bottlenecks in supply, an impressive backlog of orders and low energy prices:

“It should also support exports, especially as the global economy has regained some momentum.”

The federal government expects GDP growth of 0.4% this year and a stronger 1.6% next year. Last year, growth was 1.8%.

Meanwhile, the European Commission has recommended that all EU governments end energy price support measures before the end of this year to keep public finances in check and comply with proposed new fiscal rules in 2024. ABOUT European Commission recommendations for Greece our publication said.

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