Germany circumvents recession with growth in the first quarter
Despite the positive outcome, the war in Ukraine has had ‘a growing impact’ on the economy since the invasion of Russia in late February
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Germany’s economy grew 0.2% in the first quarter of 2022, official figures showed on Friday, avoiding a technical recession after ending 2021 on a weaker note.
Despite the positive outcome, the war in Ukraine has had “a growing impact” on the economy since the Russian invasion in late February, the federal statistics agency Destatis said in a statement.
Gross domestic product shrank 0.3% in the last quarter of 2021 as supply bottlenecks and a new wave of coronavirus took their toll.
Europe’s largest economy was caught between “two opposing forces”, said Fritzi Koehler-Geib, chief economist at public lender KfW.
The recovery from the latest wave of the coronavirus had given “positive momentum”, she said, but new bottlenecks in raw materials and components following the conflict in Ukraine were “weighing down” on the economy. economy.
Disruptions in the supply of key parts from Ukraine have hampered production, forcing a temporary shutdown at the plant of Germany’s top carmaker Volkswagen.
Rising “energy and food” costs due to the conflict have also taken the breath away from a hoped-for post-pandemic consumer boom, Koehler-Geib said.
Earlier this week, the German government cut its growth forecast in 2022 to 2.2% from the 3.6% figure it had put forward in January.
Germany, which is heavily dependent on Russian energy imports and has close trade ties with Moscow, was “paying the price” for its support for Ukraine, Economy Minister Robert Habeck said.
A Russian gas embargo in response to the war could have a potentially painful impact on businesses and consumers, driving up the cost of energy even further.