Germany, Europe's Largest Economy, Enters Recession After Successive GDP Drops

After a 0.5 percent shrinkage at the end of 2022, Germany's economy contracted again between January and March.

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Germany slipped into a recession after its economy contracted in the first quarter of 2023, according to official figures published on Thursday, May 2023.

The data shows that Europe’s largest economy contracted by 0.3 percent between January and March of this year. This comes after a 0.5 percent shrinkage in the last three months of 2022.

A country is considered to be in recession if its economy contracts for two consecutive quarters.

The numbers are a huge blow to the German economy, especially after the government doubled its growth forecast for 2023 after the much-feared energy crunch, courtesy Russia's invasion of Ukraine. The lack of gas supply left Berlin scrambling yo find new sources of energy.


One of the main factors that impacted the German economy was the country’s energy crisis which occurred due to Russia’s invasion of Ukraine. Previously, Germany was heavily reliant on Russia in terms of energy imports.

According to the official report, household spending on things like food, clothing, and furniture was down by 1.2% quarter-on-quarter following price, seasonal and calendar adjustments. Government spending also took a 4.9% hit in the quarter. The energy crisis has also had a direct impact on industries.

Although private sector investment and exports rose, it was not enough to get Germany off track from a recession.

In April 2023, Germany’s inflation rate stood above the European average at 7.2%. However, it was still below the UK's 8.7% last month.

The International Monetary Fund predicted in a report that Germany’s economy is on its way to becoming the weakest among the world’s advanced economies.

The last time Germany faced a recession was during the coronavirus pandemic since the start of 2020, after large sections of the economy were shut down.

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Topics:  Germany   Recession   Russia Ukraine War 

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