Germany skirts recession with Q1 growth
Despite the positive result, the war in Ukraine has had "a growing impact" on the economy since Russia's invasion in late February
The German economy grew by 0.2 per cent in the first quarter of 2022, official figures published Friday showed, swerving a technical recession after ending 2021 on a downwards note.
Despite the positive result, the war in Ukraine has had "a growing impact" on the economy since Russia's invasion in late February, the federal statistics agency Destatis said in a statement.
Gross domestic product shrank 0.3 per cent in the last quarter of 2021 as supply bottlenecks and a new wave of the coronavirus took their toll.
Europe's largest economy was caught between "two opposing forces", said Fritzi Koehler-Geib, chief economist at the public lender KfW.
The recovery after the last wave of the coronavirus had given a "positive impulse", she said, but new bottlenecks in raw materials and components as a result of the Ukraine conflict were "weighing" on the economy.
Interruptions to supplies of key parts from Ukraine have hampered production, forcing a temporary factory stop at Germany's leading auto manufacturer Volkswagen.
Rising costs for "energy and food" due to the conflict had likewise taken the wind out of a hoped for post-pandemic consumer boom, Koehler-Geib said.
Earlier this week, the German government slashed its forecast for growth in 2022 to 2.2 per cent from the 3.6-per cent figure it had put forward in January.
Germany, which is highly reliant on Russian energy imports and maintained strong business links with Moscow, was "paying a price" for its backing for Ukraine, Economy Minister Robert Habeck said.
An Russian gas embargo in response to the war could have potentially painful impact on businesses and consumers, driving the cost of energy even higher.
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