The German Gross Domestic Product (GDP) contracted in the first quarter of the year by 0.3%, according to the final data published today by the Federal Statistical Office (Destatis), so it entered a technical recession by adding two consecutive quarters in negative. "After the contraction reflected at the end of 2022, another quarter was negative," said the president of Destatis, Ruth Brand.

The Economy Ministry forecasts pointed to a stagnation of the German economy between January and March 2023, after the fall of 0.5% that had been registered in the last quarter of 2022.

Germany's entry into technical recession was not included in the European Commission's forecasts either. Just a few weeks ago, Brussels ventured that Germany's economic situation will evolve better than expected and that, although growth would be very low, the country would enter recession in 2023. The European Commission expected a small increase of 0.2% of GDP. This is a significant improvement on the forecast, after it had estimated -0.6% in November.

The Destatis data has fallen like a jug of cold water and not only because it was unexpected. They indicate that the German economy has registered the worst performance among the large economies of the eurozone, since Spain and Italy grew by 0.5% and France did so by 0.2%, while the average of the euro zone was 0.1%. On the other hand, the GDP of the United States in the first quarter grew by 0.3%.

In its analysis, Destatis highlights the drag on the German economy from the sharp price increases, which was especially reflected in household final consumption expenditure, which decreased by 1.2% in the first quarter of 2023.

The contraction in GDP was the result of the fall in consumption resulting from inflation, which, although it began to be contained, after reaching peaks in October above 10%, stood at 7.2% year-on-year in April.

However, there were positive impulses from exports and investment, as well as a recovery in the construction and industrial equipment sector, machinery production, household appliances and automobiles.

Thus, exports as a whole experienced an increase of 0.4% in this first quarter compared to the last quarterly period of 2022.

Imports, on the other hand, fell by 0.9%, according to detailed data from Destatis, which highlights the decline experienced in fuels, minerals and chemical products.

On the other hand, Destatis indicated that the economic performance in the first quarter of 2023 was achieved with approximately 45.6 million people employed in Germany, which implies an increase of 446,000 workers (+1%) compared to the previous year.

On average, the number of hours worked per employee was similar to that of the first quarter of 2022 (-0.1%), while the workload of the overall economy increased by 0.9% in the same period.

Global labour productivity (GDP adjusted for prices per hour worked by employed persons) fell by 1% compared to the same quarter of the previous year and labour productivity per employed person was 1.1% lower in year-on-year terms.

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