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The German economy shrank unexpectedly in the fourth quarter.

The German economy shrank unexpectedly in the fourth quarter, data showed on Monday, suggesting

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that Europe's biggest economy could be heading into a much-predicted downturn. However, it is more likely to be a milder downturn than initially forecast. The German economy shrank 0.4% in Q4-2022, the statistics agency said Friday, down from the three months prior. Germany's economy shrank more than expected over the past three months of 2022 amidst a continuing energy crisis and rising inflation, raising fears that the country may be heading toward recession.

On an annual basis, Germany's economy shrank 2.3 per cent from January through March, the same period in 2019, posting annual growth of 0.4 per cent in the fourth quarter. The European economic downturn widened late last year, with the size of its economy shrank by 0.6% in the final three months, the steepest contraction since the financial crisis, which showed Gross Domestic Product falling by 0.2 per cent.

 High inflation caused sharp declines in German consumer spending and investments in buildings and machinery during the fourth quarter, leading to lower gross domestic product (GDP), the Federal Statistics Office, Destatis, said on Friday. In addition, the country's statistical agency said that buildings and machinery investments significantly declined in the fourth quarter of last year.

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  1. Allan25 February 2023 at 08:52

    A mild downturn was expected I think and things will continue to stay like this until inflation goes down. People will start buying more once prices are relatively back to normal but it could take the better part of the year for this to happen.

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    1. Jackson25 February 2023 at 10:07

      Yes, I was expecting this to be the case as well. High inflation can do this in the toughest economies. Once that starts going down a bit, the economy will pick up. With a bit more intervention from their government, in 4-6 months we will see that the German economy is on its way to being in the green again.

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