Germany dodges Q1 recession despite war, pandemic

STORY: Germany dodged recession in the first quarter, despite the impact of war and health crisis.

Data out Wednesday (May 25) showed Europe’s largest economy grew 0.2% on the quarter.

That was in line with analyst forecasts.

The growth meant it avoided recession, defined as two straight quarters of economic contraction.

Germany’s economy did shrink 0.3% in the previous quarter.

Separate figures showed consumer sentiment edging up from record lows.

But Rolf Buerkl from survey compiler GfK says Germans remain pessimistic:

“Even though economic expectations did not drop further in May, consumers still fear a recession. Supply chain problems and missing semiconductors currently prevent a sustainable recovery of large parts of the German economy."

Household and government spending were broadly unchanged over the latest period.

It was investments that helped drive growth.

Construction investment was particularly strong, rising 4.6%, helped by mild weather.

Money also flowed into machinery and equipment.

Exports - normally a German strength - were a weak spot, declining at the start of the year.

In its spring forecast, Berlin said it expected overall economic growth of 2.2% this year.