Germany recession

BERLIN, Sept 5 (Reuters) - Germany, Europe's largest economy, is still on course for a recession even with a new government plan to spend 65 billion euros ($64.49 billion) on shielding energy customers and businesses from soaring inflation, economists say. The latest package brings to 95 billion euros the amount allocated to inflation-busting since the Ukraine war began in February. By contrast, the government spent 300 billion euros on propping up the economy over the two years of the pandemic. "The third relief package does little to change the fact that Germany is likely to slide into recession in the autumn," said Commerzbank chief economist Joerg Kraemer. ING chief economist Carsten Brzeski agreed: "The package will probably fall short in preventing the broader economy from falling into recession." Economists widely define a recession as two or more consecutive quarters of negative growth, or contraction. The German economy grew by the narrowest of margins in the second quarter, and the war in Ukraine, soaring energy prices, the pandemic and supply disruptions are now pushing it towards a downturn, which it may already be in. A survey published on Monday showed Germany's services sector contracted for a second month running in August as domestic demand came under pressure from soaring inflation and faltering confidence. Russia's decision to stop pumping gas via the Nord Stream 1 pipeline adds to Germany's woes, though Germany's gas stores reached 85% of capacity on Sa...

Key points: • Gross domestic product fell by 0.5 per cent in the fourth quarter of 2022 and 0.3 per cent in the first quarter of this year • Forecasts of the IMF predicted a recession in 2023 only in Germany and Britain • Germany's economy minister said his nation's previous high dependency on Russian gas led to the recession Gross domestic product fell by 0.3 per cent in the first quarter of the year when adjusted for price and calendar effects, a second estimate from the statistics office showed on Thursday. This follows a decline of 0.5 per cent in the fourth quarter of 2022. A recession is commonly defined as two successive quarters of contraction. German GDP data showed "surprisingly negative signals," Finance Minister Christian Lindner said on Thursday. He added that comparing Germany with other highly developed economies, the economy was losing potential for growth. "I don't want Germany to play in a league in which we have to relegate ourselves to the last positions," he said, referring to the forecasts of the International Monetary Fund (IMF), which predicted a recession in 2023 only in Germany and Britain among European countries. Robert Habeck, Germany's economy minister, said his nation's previous high dependency on Russia for energy supply led to the recession but the growth forecasts were much bleaker. "We're fighting our way out of this crisis," Mr Habeck said at an event in Berlin. "Under the weight of immense inflation, the German consumer has fallen to hi...

The seasonally adjusted figures from the national statistics institute, Destatis, meet the technical definition of a recession: two consecutive quarters of economic contraction. This puts Germany in recession for the first time since the decline in GDP in the first and second quarters of 2020, when the Covid-19 pandemic began to bite. With German consumers and businesses battered by high inflation and rising interest rates, the country's Gross Domestic Product (GDP) fell by 0.3% between January and March – following a 0.5% decline between October and December last year. So why is this happening? Under pressure The downturn is due in particular to the fall in domestic consumption as a result of inflation. People are simply belt-tightening, with skyrocketing prices meaning there is less cash to splash. Inflation remains very high at more than 7.2% in April, despite a gradual decline. Top of the list of factors fuelling price rises is the war in Ukraine. German industry, long dependent on cheap Russian gas, was hit hard last year after Moscow launched its ill-fated invasion in February 2022. Supplies were cut off and prices soared. Still, the economy at first seemed to be holding up better than expected at the start of the year, thanks to massive public aid, increased use of liquefied gas and a fall in gas prices since autumn. Industry also benefited from the reopening of China from COVID restrictions and an easing of supply difficulties on international markets, boosting exp...

BENGALURU, Sept 2 (Reuters) - The German economy is on track to contract for three consecutive quarters starting from this one, according to a Reuters poll of economists, following a dramatic spike in gas prices after Russia slashed deliveries to Europe. Europe's largest economy and manufacturing powerhouse is among the most vulnerable to any cut-off in energy supplies or rising costs as its industrial sector relies heavily on Russian gas. The Aug. 29-Sept. 1 Reuters poll showed Germany would see three consecutive quarters of negative growth, surpassing the definition of a technical recession which only requires two. As most of the euro zone grapples with the energy crisis, medians in the poll suggested the German economy would shrink 0.1% and 0.3% in the third and fourth quarters this year, and 0.2% in the first quarter of next year. That is a sharp turnaround from expectations of 0.2%, 0.3% and 0.4% quarterly growth as recently as July. "Gas prices are moving from one astronomic high to the other and will lead to unprecedentedly high energy bills over the winter," noted Carsten Brzeski of ING. "Even without a complete stop to Russian gas, high energy and food prices will weigh heavily on consumers and industry, making a technical recession – at least – inevitable." The economy was then forecast to grow 0.4% in the second quarter followed by 0.6% and 0.5% growth in the following quarters next year. On average, the German economy was expected to grow 1.5% this year and the...

Germany has been Europe’s economic engine for decades, pulling the region through one crisis after another. But that resilience is breaking down, and it spells danger for the whole continent. Decades of flawed energy policy,the demise of combustion-engine cars and a sluggish transition to new technologiesare converging to pose the most fundamental threat to the nation’s prosperity since reunification. But unlike in 1990, the political class lacks the leadership to tackle structural issues gnawing at the heart of the country’s competitiveness.

Germany suffered its first recession since the start of pandemic, extinguishing hopes that Europe’s top economy could escape such a fate after the war in Ukraine sent energy prices soaring. First-quarter output shrank 0.3% from the previous three months following a 0.5% drop between October and December, the statistics office said Thursday. Its initial estimate, last month, was for stagnation. The result is a setback for Germany, which despite escaping the bleakest scenarios feared in the aftermath of Russia’s invasion has nevertheless succumbed to a recession that Chancellor Olaf Scholz appeared to rule out in January. “We must turn the corner in economic policy and put an end to the neglect of our competitiveness,” Finance Minister Christian Lindner said in Berlin, adding that this included the “acceleration of planning and approval procedures and strengthening the idea of technological freedom in order to leverage our creative potential.” Markets shrugged off Thursday’s numbers — despite their implications for the wider performance of the 20-nation euro zone. In Germany, companies like Zalando SE reflect the The key manufacturing sector is also proving to be a problem: A deepening downturn is casting doubt on the rebound many anticipate for the coming quarters. Indeed, industrial weakness is taking a toll on the A Bundesbank report this week offered some optimism — suggesting the economy may grow “slightly” this quarter as large order backlogs, an easing of supply bottl...

A German shop in Cologne declares: ‘We’re closing’. After a few statistical revisions, the German economy did fall into a technical recession this winter, as widely feared last summer. Photograph: Ying Tang/NurPhoto/Shutterstock A German shop in Cologne declares: ‘We’re closing’. After a few statistical revisions, the German economy did fall into a technical recession this winter, as widely feared last summer. Photograph: Ying Tang/NurPhoto/Shutterstock A previous estimate suggested The statistics office said on Thursday that while private sector investment and construction grew at the start of the year, this was offset in part by a drop-off in consumer spending as higher prices forced households to rein in spending. Overall, household spending dropped 1.2% in the first quarter, with shoppers less willing to splash out on food, clothes, and furniture. Government spending also dipped by 4.9% compared with the previous quarter. The war in Ukraine has unsettled both businesses and consumers, both holding back on investing and buying respectively, which has affected demand. Interest rate rises by the European Central Bank have so far had little influence on reducing inflation, which stands at 7% across the eurozone. Considerably higher heating costs, despite government subsidies, meant German consumers were holding back on spending on other things. Carsten Brzeski, the global head of macro economics at the Dutch bank ING, said the overall decrease in Germany’s gross domestic p...