# German economy skirts recession, but just for now Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-28 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: German Economy Dodges Recession for Now Meta Description: Discover how the German economy narrowly avoided recession in the first quarter of 2023 with a detailed analysis of the GDP figures and expert predictions. URL: https://financedigest.com/german-economy-skirts-recession-but-just-for-nowhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-28t083435z1lynxmpej3r0dartroptp4germany-dailylife-frankfurt-1736814091982-compressed.jpg) # German economy skirts recession, but just for now By Maria Martinez BERLIN (Reuters) -The German economy stagnated in the first quarter, as a decline in government and household consumption was balanced out by an increase in exports and capital investment, data showed on Friday. Gross domestic product was unchanged quarter on quarter in adjusted terms, the federal statistics office said. A Reuters poll of analysts had [forecast growth](https://www.financedigest.com/hydrolyzed-collagen-market-sales-is-expected-to-clock-high-growth-rate-by-forecast-2028.html "Hydrolyzed Collagen Market Sales Is Expected To Clock High Growth Rate By Forecast 2028") of 0.2%. Detailed [results for the first quarter](https://www.financedigest.com/aon-reports-first-quarter-2018-results.html "Aon Reports First Quarter 2018 Results") will be released by the statistics office on May 25. The German economy remained stuck in the mud at the start of 2023, only barely avoiding recession,” Pantheon Macroeconomics’ [chief eurozone economist](https://www.financedigest.com/ecb-should-raise-rates-at-steady-pace-chief-economist-says.html "ECB should raise rates at steady pace, chief economist says") Claus Vistesen said. The German economy shrank by a revised 0.5% in the fourth quarter of 2022 compared with the previous three months, reviving [fears of a technical recession](https://www.financedigest.com/oil-settles-below-90-as-recession-fears-mount.html "Oil settles below as recession fears mount"), defined as two consecutive quarters of contraction. With the outturn for the fourth quarter also revised down, that left the economy broadly in line with its [pre-pandemic level](https://www.financedigest.com/marstons-says-q4-sales-above-pre-pandemic-levels.html "Marston’s says Q4 sales above pre-pandemic levels"), while GDP is significantly above that mark in Italy and France,” Capital Economics’ senior Europe economist Franziska Palmas said. The German government [raised its economic growth forecast](https://www.financedigest.com/cosmetic-procedures-market-to-raise-at-a-cagr-of-7-5-over-the-forecast-period-2017-2025.html "Cosmetic Procedures Market To Raise At A CAGR Of 7.5% Over The Forecast Period 2017-2025") for this year to 0.4% from a previously predicted 0.2%, according to its spring economic projections published on Wednesday. A gradual recovery is underway, despite a persistently difficult environment,” German [Economy Minister](https://www.financedigest.com/italys-giorgetti-gets-melonis-backing-to-be-economy-minister.html "Italy’s Giorgetti gets Meloni’s backing to be economy minister") Robert Habeck said in the presentation of the forecasts. He expects an [acceleration in growth](https://www.financedigest.com/china-nov-export-growth-slows-but-imports-accelerate.html "China Nov export growth slows but imports accelerate") after the first quarter. But economists warn that the [euro zone’s largest economy hasn’t escaped the risk of a recession](https://www.financedigest.com/euro-zone-bond-yields-fall-as-ecb-policymaker-flags-recession-risk-gilts-eyed.html "Euro zone bond yields fall as ECB policymaker flags recession risk, gilts eyed") yet. The recent renaissance in industrial production could very well carry the economy through the [second quarter,”](https://www.financedigest.com/dollar-pares-gains-as-us-growth-contracts-for-second-quarter.html "Dollar pares gains as US growth contracts for second quarter") ING’s global head of macro Carsten Brzeski said. However, we are afraid that looking into the second half of the year, the [German economy will continue its flirtation with recession.”](https://www.financedigest.com/german-recession-increasingly-likely-bundesbank-says.html "German recession increasingly likely, Bundesbank says") In the second half of the year, the [industrial backlog will have been reduced without new strong demand](https://www.financedigest.com/demand-for-electrical-safety-insulating-gloves-is-strong-in-the-power-utility-industry-unveils-fact-mr.html "Demand for Electrical Safety Insulating Gloves Is Strong In The Power Utility Industry Unveils Fact.MR") coming in, the impact of the most aggressive monetary policy tightening in decades will fully unfold and a slowdown of the U.S. economy will [hit German](https://www.financedigest.com/german-bonds-set-for-worst-month-in-decades-as-inflation-hits-new-highs.html "German bonds set for worst month in decades as inflation hits new highs") exports, Brzeski said. A technical [recession in the winter](https://www.financedigest.com/euro-zone-downturn-deepened-in-oct-winter-recession-likely-pmi.html "Euro zone downturn deepened in Oct, winter recession likely -PMI") half-year is off the table for the time being. However, we advise caution regarding the second [half of the year,”](https://www.financedigest.com/tods-sales-rise-17-in-first-half-of-year.html "Tod’s sales rise 17% in first half of year") Commerzbank senior economist Joerg Kraemer said. Kraemer is worried about the [European Central Bank’s](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans") sharp rise in interest rates. In the past, such [rate hikes have always been followed by recessions](https://www.financedigest.com/ecb-must-be-prudent-with-rates-hikes-as-recession-risk-rises-panetta.html "ECB must be prudent with rates hikes as recession risk rises: Panetta") in Germany,” Kraemer said. (Reporting by Miranda Murray and Maria Martinez, Editing by Rachel More, William Maclean) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---