“Black sheep”
Various economic indicators for the month of March illustrated the situation, including industrial production, central to the German economic model, which fell by 3.4% compared to February.
Likewise, vehicle production decreased by 6.5% and construction contracted by 4.6%.
Industrial orders also fell sharply in March, down 10.7% compared to February, unprecedented since the nadir of the pandemic. Exports, essential for this sector, fell by 5.2%.
All of this occurred in a context of falling domestic consumption, due to inflation, which remains very high by German standards, above 7%.
Abroad, the country’s trading partners imported fewer German-made products due to “geopolitical turmoil, high inflation rates and loss of purchasing power,” according to the DIHK economic institute.
Despite all this, the German government forecasts a progressive recovery in activity throughout the year and growth of 0.4% for the whole of 2023.
“The economy went through a winter weakness. But we continue to expect a notable improvement in the course of the year,” the economy ministry told AFP.
But not everyone is so optimistic. The IMF forecast in April that German economic activity would contract by 0.1% this year, before a rebound of 1.1% in 2024.
The German situation stands out compared to its European neighbours, where the risk of recession has receded thanks to the fall in energy prices.
“Germany is seen as Europe’s potential black sheep,” said Guillaume Dejean, an analyst at Global Market Insight.
In Belgium and France, economic activity progressed by 0.4% and 0.2% respectively in the first quarter of 2023 compared to the previous quarter. Italy and Spain in turn grew by 0.5% in the first quarter.