Frankfurt, Feb. 24, (dpa/GNA) - Lower consumer spending and reduced company investments slowed the German economy at the end of last year, with gross domestic product (GDP) down 0.4% in the fourth quarter compared to the previous quarter.
The figure, released on Friday from the Federal Statistical Office in Wiesbaden outside Frankfurt, was lower than what analysts were expecting, and adds to concerns of a winter recession in Europe’s largest economy.
A preliminary official estimate released at the end of January was for a 0.2% decline in the fourth quarter.
Separately, the agency said the German state spent more money than it took in last year, as total government debt, including shortfalls from federal, state, municipal and social security funds, was 2.6% of total economic output, confirming the preliminary number.
The shortfall came from the federal budget, as billions in aid due to the energy crisis was spent. German states, local authorities and social security funds all reported funding surpluses. Overall, the deficit added up to €101.3 billion ($107 billion), a €32.9 billion reduction compared to the previous year.
Despite the shortfall, Germany once again complied with the currently suspended European debt rules, which allow for a budget deficit of no more than 3%. The rules are currently suspended until 2024 due to the stress caused by the coronavirus pandemic.
As for the fourth quarter GDP drop, high inflation weighed on private consumption, which had been a plus factor for the economy over the course of last year, following the end of the coronavirus restrictions.
Construction investment declined, as in the two previous quarters, adjusted for price, seasonal and calendar effects. Business investment in equipment such as machinery, appliances and vehicles also fell.
According to economists, GDP is likely to shrink in the first quarter of the current year as well.
“Economic output in the first quarter of 2023 is likely to be lower than in the previous quarter once again,” the German Bundesbank, the central bank, wrote in its current monthly report. This would mean that Germany would have slipped into a winter recession.
Economists generally define two consecutive quarterly declines in growth as a recession.
GNA