According to recent data, the German economy contracted more than expected in the final quarter of 2022, shrinking by 0.4 per cent compared to the previous three months, and raising concerns about a potential recession.
Initially, preliminary figures suggested a 0.2 per cent decrease, but the impact of inflation and the energy crisis on household consumption and capital investment led to a worse outcome.
Experts predict another negative result this quarter, which could lead to an official recession.
However, a mild winter has provided some relief, preventing the gloomier scenarios predicted when Russia invaded Ukraine last year.
In the fourth quarter, household spending declined by 1 per cent, as relief measures, such as the country’s fuel discount and a €9 transport ticket, ended, resulting in lower consumption.
Despite this, a recent poll by GfK suggests that German consumers are more optimistic about the future heading into March, with its forward-looking survey of approximately 2,000 people showing a 3.3-point increase to reach minus 30.5 points for the month, the fifth consecutive monthly increase.
