Before sunrise, residential buildings and office towers in the banking metropolis of Frankfurt are reflected in the leisurely flowing Main River.
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The German economy entered a technical recession in the first quarter of this year, as households tightened their spending.
Data from the German statistics office on Thursday showed a downward revision in GDP (gross domestic product) from zero to -0.3% for the first three months of the year.
This comes after Germany recorded a contraction of 0.5% in the last quarter of 2022. Two consecutive quarters of negative growth define a technical recession.
Europe’s largest economy has come under significant pressure, particularly following Russia’s invasion of Ukraine and the subsequent decision by European leaders to sever ties with Moscow.
According to the statistics office, German households spent significantly less in the first quarter, with final consumption expenditure down 1.2% over the period as consumers were reluctant to spend their money on clothes, furnishings, cars, etc. .
“Germany fell into recession late last year, after all, as the energy price shock weighed on consumer spending,” said Claus Vistesen, chief eurozone economist. at Pantheon Macroeconomics, in a note to clients.
He added that German GDP is unlikely to continue to decline in the coming quarters, “but we don’t see a strong recovery either.”
The latest economic development is taking place against a backdrop of high inflation and high interest rates across the region. The European Central Bank is expected to raise rates again at its next meeting on June 15. The central bank has raised rates by 375 basis points since July.
German Central Bank Governor Joachim Nagel said earlier this week that the ECB had “several” more rate hikes to come. He is one of the most hawkish members of the central bank.