German economy slips into recession

• The German economy has suffered an unforeseen setback, plunging the country into a formal recession, according to newly released data.
• The Federal Statistical Office’s report of Germany revealed a 0.3% decline in Germany’s gross domestic product (GDP) during the first quarter of 2023.
• This follows a 5% contraction in the previous quarter of 2022.
• These two consecutive quarters of decline fulfil the criteria for technical definition of a recession.
• This is significant because Germany is Europe’s largest and World’s 4^th largest economy.

WHAT IS A RECESSION?

• A recession is defined as a time when economic activity experiences a downturn.
• A recession is identified by two consecutive quarters of decline in a country’s real (inflation-adjusted) GDP, which takes inflation into account.
• Note- brief declines are not classified as recessions.