The German economy contracted more strongly than expected in the final three months of 2022, as inflation and the energy crisis took their toll on household consumption and capital investment.
The German economy shrank by 0.4% in the fourth quarter of 2022 compared with the previous three months, the statistics office said on Friday.
Preliminary data from the office had pointed to a 0.2% quarter-on-quarter contraction adjusted for price and calendar effects. In the third quarter of 2022, gross domestic product saw slight growth of 0.5% compared to the three months prior.
The second consecutive drop in the Ifo’s current assessment component, a falling manufacturing PMI, weak consumer confidence and a willingness to spend close to historical lows, all point to a contraction of the German economy once again in the first quarter, ING’s global head of macro Carsten Brzeski said.
The worse-than-expected final result for the fourth quarter increases fears of a winter recession. A recession is commonly defined as two successive quarters of contraction.
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