The German economy stagnated in the fourth quarter – Federal Statistical Office

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German economic output likely stagnated in the final quarter of last year and grew 1.9 percent for the full year 2022, the Federal Statistical Office said on Friday, suggesting Europe’s largest economy could escape a recession during the winter.

The 1.9 percent increase in gross domestic product (GDP) for the full year beats the mid-term forecast of a Reuters poll of economists that pointed to 1.8 percent growth in 2022.

Early fourth-quarter data suggest Germany could avoid recession, defined as two consecutive quarters of contraction.

There are growing signs that the economy, which grew in the third quarter, could avoid the worst of a recession triggered by Russia’s slumping energy supply following the invasion of Ukraine.

Business morale rose more than expected in December, improving the outlook for the economy despite the energy crisis and high inflation, a survey showed last month.

Earlier this week, the government’s economic adviser, Monika Schnitzer, told Reuters that inflation in Germany has likely peaked as global energy prices have fallen, adding that she expects natural gas prices to continue to fall this year.

German inflation fell in December for the second consecutive month due to falling energy prices and one-time payment of household energy bills by the government, and harmonised consumer prices in the EU rose by 9.6% year-on-year.

The Statistical Office added that the German government deficit stood at 2.6% of GDP in 2022.

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