Germany’s economy unexpectedly contracted in the second quarter of 2023, raising concerns about a potential recession. The country’s gross domestic product (GDP) declined by 0.1% compared to the previous three months, according to preliminary data released by the statistics office. This contraction comes after a narrow avoidance of recession in the first quarter. Analysts had forecast a 0.1% quarter-on-quarter increase, indicating a surprising downturn for the eurozone’s largest economy.
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The shrinking economy is particularly concerning given the easing of inflation pressures. The data suggests that the German economy is struggling to recover despite favorable conditions. Economists are closely monitoring national inflation data, expected to be released later today, and eurozone inflation data scheduled for Wednesday. Regional inflation figures show mixed signals, with some areas experiencing increases while others see declines.