Germany has entered a recession as a result of worse economic damage than anticipated caused by rising inflation rates.
The largest economy in Europe saw a 0.3% decline in output in the first quarter of 2019, which followed a 0.5% decline at the end of 2022, according to official figures released on Thursday, May 25.
The Federal Statistical Office revised its earlier prediction of zero increase in the GDP compared to the prior quarter. When output declines for two consecutive quarters, a recession is said to have occurred.
The numbers are a setback for the German government, which last month boldly boosted its growth projection for this year following the averted occurrence of a winter energy shortage. It expected that GDP would expand by 0.4%, up from the 0.2% increase predicted in late January, a prediction that may now need to be revised lower.
However, more recent PMI survey data indicated earlier this week that economic activity in Germany rose again in May, despite a severe decline in manufacturing. This suggests that the recession may only last a short while.