GERMAN Q4 GDP: START OF A RECESSION? – COMMERZBANK

Commerzbank's Chief Economist, Dr Jörg Krämer, offers a brief analysis of the Preliminary German GDP, which showed that the Eurozone's largest economy contracted by 0.2% during the fourth quarter. This was below consensus estimates for a flat reading and the 0.4% growth recorded in the previous quarter.

Key Quotes:

“Contrary to guidance by the Federal Statistical Office, the Q4 German GDP declined somewhat on Q3 (-0.2%). This was mainly due to private consumption. Consumers are not immune to the erosion of their purchasing power by record high inflation. Another argument for an – albeit mild – recession is that the central banks in many countries had to massively raise their interest rates because of inflation. In addition, German companies have probably already worked off a good part of the high order backlog created during Corona. We still expect German GDP to shrink by 0.5%.”