Germany's economy experienced a contraction in the final quarter of 2023, narrowly avoiding a recession. The decline can be attributed to low global demand and high inflation, which have continued to impact the country's economic performance.
Preliminary data from Germany's statistics office reveals that the country's gross domestic product (GDP) decreased by 0.3% from October to December, after adjusting for price, seasonal, and calendar variations. This follows a period of stagnant growth in the third quarter, which was initially reported as a decline of 0.1%. As such, the economy managed to escape a technical recession, defined as two consecutive quarters of declining GDP.
This fourth-quarter decline aligns with previous estimations made by Destatis in January when full-year GDP figures were released. The data illustrated a contraction of 0.1% in 2023 for Europe's largest economy, primarily due to soaring inflation and restrictive financing conditions.
Looking ahead, Germany's central bank, the Bundesbank, projects a gradual recovery for the economy in 2024. They anticipate a modest expansion of 0.4% throughout the year. GDP data for the entire eurozone for the final three months of 2023 will be published at 1000 GMT.