German economy faces a crunch with no positive outlook this year
Although the office doesn't break down the GDP sector, it did confirm that private consumer spending was a major factor in the contraction.
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Demonstrators protesting in Berlin against the cost-of-living conditions in November 2022 (AFP)
The German economy is in a pickle - and it's safe to say, literally.
After contracting in the fourth quarter of 2022, its GDP dropped 0.2% between the third and fourth quarter, which is a sharp drop from the 0.5% increase recorded in the previous three-month timeframe.
The statistics office, Destatis, stated on Monday: “After the German economy held up well in the first three quarters despite difficult conditions, economic output decreased slightly in the fourth quarter.”
Although the office didn't break down the GDP sector, it confirmed that private consumer spending was a main factor in the contraction, as it added that output increased 1.1% as opposed to 2021 and less than the 1.3% expected by financial analysts.
The inflation in Germany will possibly remain high until the end of 2024 as the country's companies spill their rising costs onto customers, the government's senior economic aide warns.
Read next: German inflation to remain high until end of 2024
Very slow growth this year
The Eurozone's biggest economy has been one of the hardest economies hit among other European countries due to increasing gas prices, due to its large manufacturing production.
Franziska Palmas, a senior Europe economist at Capital Economics, explained that the German economy “will at best flatline in the first half of 2023 and only grow very slowly thereafter,” as interest rates skyrocket alongside cost-of-living.
Read more: Germany to face 5Mln understaffing by 2030: Union chief
Looking at other EU nations, Sweden’s economy diminished 0.6% in the last quarter of 2022 according to figures released on Monday.
Last week, Spain demonstrated a 0.2% expansion over the same period. Economists do not expect any change in the fourth quarter output, which is due to be released on Tuesday.
In light of these circumstances, Berlin Brandenburg Airport (BER) ground services employees, under the United Services Union, ver.di (Vereinte Dienstleistungsgewerkschaft), staged a walkout last week demanding a pay raise, which left all passenger flights grounded until further notice.
According to airport authorities, approximately 300 flights, which carry around 35,000 passengers to and from BER, have been canceled. It is worth noting that BER is one of Germany's busiest airport.
Earlier, ver.di called for a "warning strike." It demanded a 10.5% raise in base wages, with a minimum of 500 euros per month over a 12-month period.
