German economy escapes recession despite a 0.3% contraction ‎in 2023‎

German economy contracted in 2023 due to persistent inflation, high energy prices and weak external demand, but it avoided a recession at the end of the year.‎

The Federal Statistics Office said on Monday that the gross domestic product contracted by 0.3% during the entire year 2023.

According to Reuters, Ruth Brand, head of the statistics office, said on Monday in Berlin that “comprehensive economic development faltered in Germany in 2023 in an environment that is still characterized by multiple crises.”

The decline in gross domestic product for the full year was in line with the expectations of analysts polled by Reuters.

In the last quarter of last year, the German economy shrank by 0.3% compared to the previous quarter.

Output in the largest economy in the euro zone saw little change in the third quarter compared to the previous three months, after the Statistics Office revised data upward.

By stabilizing in the third quarter, the German economy has avoided entering a recession, which is usually defined as two consecutive quarters of contraction.

“Some are comforted by the fact that the economy is stuck just contracting and avoiding a recession…,” said Carsten Brzeski, global head of macroeconomics at ING.