The revised data from Germany’s federal statistical office reveals that the country’s gross domestic product (GDP) contracted by 0.3% in the first quarter, following a previous quarter of contraction, according to a report by the Guardian. The decline in Germany’s economy has pushed it into a recession due to the substantial toll imposed by high prices.

Confirmation has arrived that the German economy experienced two consecutive quarters of contraction, meeting the technical definition of a recession. The first quarter contraction of 0.3% follows a 0.5% drop in the final quarter of 2022. Earlier estimates, released in April, had suggested that Germany had narrowly avoided a recession with zero growth.

Carsten Brzeski, the global head of macro at the Dutch bank ING, stated, “It took a couple of statistical revisions, but at the end of the day, the German economy actually fell into a technical recession this winter, confirming our concerns since last summer.” A survey conducted by the World Economic Forum predicts a global recession in 2023, with potential benefits for India due to diversification of supply chains.

The statistics office reports that while private sector investment and construction experienced growth at the beginning of the year, this was offset by a decline in consumer spending. The burden of higher prices forced households to tighten their budgets, resulting in a 1.2% drop in overall household spending during the first quarter. Consumers showed reduced willingness to spend on food, clothing, and furniture. Additionally, government spending dipped by 4.9% compared to the previous quarter.

Stay informed about Germany’s economy as it grapples with the effects of soaring prices and the challenges posed by recession.