ShreeMetalPrices: Germany’s economy feels pressures in Q4; Faces recession fear


Germany’s GDP fell surprisingly in the fourth quarter, owing to lower consumer spending, confirming forecasts that Europe’s biggest economy was heading for a recession. The federal statistics department, Destatis, reported on Monday that the last quarter’s gdp fell by 0.2%.

According to the Reuters news agency, the outcome was marginally worse than experts had anticipated. And although it may not be as alarming as economists had initially forecast. The possibility with a technical recession for industrial powerhouse still exists.

According to Destatis, “economic output declined marginally in the fourth quarter after German economy performed well over the previous three quarters despite challenging circumstances.

According to the statistics department. The economy’s support in the first 9 months of 2022 came primarily from consumer spending, which has now reduced.
It was observe that the decline came after economic growth increased by 0.5 percentage in the third quarter and by 0.1 percentage in second quarter.

Demand had been constrained by skyrocketing gas costs. And the slowdown in growth indicates that the energy crisis’s impact on actual household earnings is just now beginning. According to the Financial Times.
The German economy has entered a winter recession, according to economist Timo Wollmershauser of IFO Institute. According to Reuters, analysts believe that German economy will contract within the first quarter of the 2023 and further. Two consecutive quarters of contraction is the conventional definition of a recession.

Current state of Germany’s economy

According to Thomas Gitzel, chief economist at VP Bank. “The colder months are turning to be difficult, although not as challenging as initially anticipated.”
“Although the German economy has not seen a dramatic crash, a modest recession is nevertheless expecte.”
According to Franziska Palmas, senior European economist of Capital Economics. The decline “keeps pouring cold water on the recent enthusiasm about the outlook for the eurozone … signals that a technical recession both in Germany as well as the eurozone as a whole more probable than not indeed.”

The German government this week increased its 0.2 percent growth projection for this year’s Gross domestic product from a previous 0.4 percent fall forecast.

Eurostat, European Union’s statistics bureau, said on Tuesday. That the statistics showed the single-currency region will escape an outright decline after a moderate winter alleviated concerns of energy shortages in Europe, according to Germany’s – Deutsche Welle News.

According to Eurostat. The EU’s last quarter saw the fastest economic growth in Ireland to “+3.5%”, Latvia to “+0.3%”, Spain to “each at +0.2%”, and Portugal to “+0.2%”. Lithuania to “-1.7%”, Austria to “-0.7%”, and Sweden saw the largest declines to “-0.6%”.

On Thursday, the European Central Bank has predicted to raise rates of interest once more, which could hamper economic expansion. This week, interest rate rises are projected from US Federal Reserve and also the Bank of England.