Il German GDP in the first quarter of this year it fell by 0,3% compared to the previous quarter, the fourth quarter of 2022, when it had marked -0,5%. The result is also within the estimates of economists who expected an unchanged figure, as emerged in the preliminary estimate.
La recession it is commonly defined as two consecutive quarters of contraction. The comparison with the same period last year sees the German economy contracting by 0,5%, while the estimates predicted a more contained decline (-0,1%). The yield on the 10-year Bund rose to 2,47% this morning.
In any case, we are far from the negative peaks that Germany has seen in recent years: German GDP in the second quarter of 2020, due to the pandemic crisis, had recorded a decline of 10,1%, the lowest level since the beginning of the German statistical series in 1970, and even worse than the -4,7% reached in the first quarter of 2009, at the height of the financial crisis.
"If economic output falls for two consecutive quarters, economists are talking about a technical recession," said Ruth Brand, president of Destatis. That doesn't mean, however, that the full year is bad. Thanks largely to a mild winter in Germany, worst-case scenarios, such as a gas shortage, would have left deep scars on the economy.
All private consumption is down: from food, to clothing, to furnishings
Private consumption failed to support the economy in the face of high inflation rates. According to new data, private households spent less on food and drink, clothing, shoes and furniture in the first quarter of 2023 than in the previous quarter. For consumers, the high inflation it is a challenge as it erodes their purchasing power, as people can afford less with every euro. Although the upward trend in prices has weakened recently, the annual inflation rate of 7,2% recorded in April was still relatively high.
The outlook is also held back by inflation
It will still take time to review the European locomotive running at a more determined pace. According to Bundesbank, the central German bank, inflation has deeply dented purchasing power and the German economy will grow modestly in the second quarter of 2023. Price growth will decline "only very gradually" in the coming months, the Bundesbank said, as input costs remain high and the salary growthi continues to fuel price pressures. Furthermore, the market of work, already very rigid, could become even more so.
Ifo: German exports lack momentum
Not even the Ifo sees a rose with Export Expectations down to 1,8 points in May from 6,5 in April, the lowest level since November 2022. “Global interest rate hikes are slowly having an effect question,” says Klaus Wohlrabe, head of investigations at the Ifo. “The German economy of exports lacks momentum." Both companies in the automotive sector and those in the metal and textile industries have forecast a decline in exports. Only those that produce data processing equipment and clothing are optimistic.
The confidence of German Gfk consumers improves but only slightly
Indications in chiaroscuro, finally, from consumer confidence. Although income expectations continued to rise for the eighth consecutive month, both propensity to purchase and expectations about the economy deteriorated slightly.
The index elaborated by the Gfk institute on consumer confidence in view of June rose by 1,6 points to -24,2 points (-25,8 in May). Economists had expected a less pronounced improvement to -24,5 points. “At the moment the indicator is not showing a clear bullish momentum. The growth of trust has somewhat slowed down”, explains Rolf Buerkl, analyst at Gfk.
Comparison in Europe. Italy shines with a +0,5%
In Italy the preliminary estimate on GDP released by Istat showed growth of 0,5% for the first quarter compared to the previous quarter and +1,8% compared to the first three months of last year. Data beat analysts' expectations, which forecast +0,2% and +1,4% respectively. Thanks to the growth of the industrial and services sectors and the positive contribution of both domestic and foreign demand. Italy stands out among the European partners. The GDP of the Eurozone it stops at +0,1%, while in the EU the increase is 0,3%. The largest increase, notes Eurostat, was recorded by Portugal (+1,6%), but Italy conquers the second step of the podium together with Spain and Latvia (+0,5%), while the France it stops at 0,2%.
