Germany's Recession

 

Germany is Europe's largest economy and is now in recession. The concern is that this could be an indication of  a growing economic crisis. The effect could be global and other EU countries could be effected. Output has fallen to 0.3 % in the first quarter of 2023. The aftermath of COVID-19, inflation, and the sanctions on Russia are contributing factors. Manufacturing has seen a slump in Germany. Combined with a decline in retail sales demonstrates consumers have little disposable income. If prices increase for food and fuel, consumers will not spend more.    The recession could last longer than what some economists predict. The European Central Bank has increased interest rates, which has not been done since 2008. This policy will not be a solution to the recession. Even if the sanctions related to fuel were abolished, the damage has been done. Businesses and workers are going to face the majority of hardship. Germany has a 7.2 % inflation rate, which means the average German citizen will struggle to afford certain products. The Bundesbank claims that the economy should recover around April to June. The hope is that industry will see growth, which will counter low consumer spending. Reducing subsidies for hybrid and electric cars was not the best decision for the current quarter. Car production is an essential part of the physical economy and ensures a source of employment. The German auto industry becomes less  competitive without technological innovation. The warning signs of a bigger recession were seen in 2021. According to the Federal Statistical Office ( Destatis ) Germany was  technically in a recession in March of 2021.