Germany faces recession fears

Fall in consumer spending had hit GDP in the final months of the year

FRANKFURT:

Germany’s economy unexpectedly shrank at the end of 2022 due to the fallout from the war in Ukraine, official data showed Monday, adding to worries it could be on the brink of recession.

Europe’s top economy contracted 0.2% in the October to December period compared to the previous quarter, according to preliminary figures from statistics authority Destatis.

Analysts from financial data firm Factset had been expecting zero growth, while Destatis said earlier this month the economy stagnated in the fourth quarter.

For the whole of 2022, the German economy grew 1.8%, the data showed, a revision from an earlier figure of 1.9%.

Russia’s invasion of Ukraine, and subsequent move to slash crucial gas supplies, triggered an energy crisis in industrial powerhouse Germany, and sent food and electricity costs soaring.

But after massive government interventions, signs had improved recently and expectations grew that the German economy might avoid a recession after all.

Monday’s disappointing data, however, dented those hopes.

“Recession fears are back,” said ING economist Carsten Brzeski.

Published in The Express Tribune, January 31^st, 2023.

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