German economy unexpectedly shrinks in Q4

German economy unexpectedly shrinks in Q4

BERLIN (Reuters) – The German economy unexpectedly fell in the fourth quarter, data showed on Monday, a sign that Europes largest economy may be entering a much-predicted recession as an effect of the Ukraine war.

Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said.

A Reuters poll of analysts had forecast the economy would stagnate.

In the previous quarter, the German economy grew slightly by an upwardly revised 0.5% quarter on quarter.

The decrease in the fourth quarter means a recession – commonly defined as two successive quarters of contraction – has become more likely, as many experts predict the economy will shrink in the first quarter of 2023 as well.

The economy ministry has said that the situation in Germany is expected to improve from spring onwards.

The German government last week revised up its economic forecast for 2023 and now foresees GDP growing by 0.2%, up from an autumn forecast of a 0.4% decline.