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Final GDP Print Signals German Economy Dips into Recession (1/2)

MNI (London)

GERMANY Q1 FINAL GDP -0.3% Q/Q (FLASH 0.0%); Q4 2022 -0.5% Q/Q

GERMANY Q1 FINAL GDP -0.5% Q/Q (FLASH -0.1%); Q4 2022 -0.1% Q/Q

German final Q1 GDP was revised downwards to -0.3% q/q, from 0.0% estimated in the flash. This follows a -0.5% q/q contraction in Q4 and as such implies that the German economy entered a technical recession over Q4/Q1.

  • In aggregate final consumption expenditure declined -2.3% q/q. Private consumption slumped in Q1, contracting by -1.2% q/q (consensus estimate -0/7%), following a -1.7% q/q Q4 decline. High inflation underpinned the decline in spending, evident across weak consumption in food, apparel furnishings and vehicles (new vehicles particularly following the reduction of grants for hybrid/electric cars).
  • Government spending fell -4.9% q/q, significantly missing the -0.4% q/q pencilled in by consensus, after rising a modest +0.2% q/q in Q4.
  • Capital investment surprised to the upside, expanding +3.0% q/q and rebounding from the Q4 decline of -2.6% q/q. Machinery and equipment invested alongside construction investment rebounded, the latter assisted by a mild weather.
  • Net exports rose +0.7% q/q, helped by reduced fuel imports.

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