Germany's
Federal Statistical Office (Destatis) reported on Monday the country’s gross
domestic product (GDP) shrank 0.3 per cent y-o-y last year, following a downwardly revised
1.8 per cent y-o-y expansion (from 1.9 per cent y-o-y) in 2022. This marked
the first full-year contraction in the German economy since 2020 (-3.8 per cent
y-o-y). After
adjustment for calendar effects, the decline in economic performance amounted
to 0.1 per cent y-o-y, Destatis noted.
Economists had anticipated
Germany’s GDP to demonstrate a 0.3 per cent y-o-y decrease in 2023.
Commenting on
the 2023 GDP data, Destatis president Ruth Brand noted that overall economic
development in Germany faltered last year in an environment that continues to
be marked by multiple crises. “Despite recent price declines, prices remained
high at all stages in the economic process and put a damper on economic growth,”
she added. “Unfavourable financing conditions due to rising interest rates and
weaker domestic and foreign demand also took their toll”.
From an
expenditure perspective, household consumption expenditure fell 0.8 per cent
y-o-y, general government consumption expenditure decreased 1.7 per cent
y-o-y, and gross fixed capital formation slipped 0.3 per cent y-o-y.
Sector-wise, the industry
contracted by 2.0 per cent y-o-y in 2023, primarily due to reduced production
in the energy supply sector, as well as a 0.4 per cent y-o-y drop in manufacturing
(accounts for almost 85 per cent of industry). Meanwhile, construction (+0.2 per
cent y-o-y) and most service branches expanded last year. Information and
communication branch showed the largest increase (+2.6 per cent y-o-y),
followed by other services (+1.8 per cent y-o-y), public services, education,
and health (+1.0 per cent y-o-y), and business services (+0.3 per cent y-o-y).
At the same time, trade, transport, accommodation and food services declined (-1.0
per cent), mainly reflecting a significant decrease in wholesale and retail
trade.