Just like the U.S., many other countries' economies have been struggling due to the pandemic and other inflationary factors. One of the countries that have been affected is Germany whose economy has shrunk by 0.2% in the last quarter of 2022. Germany is known to be Europe's largest economy as well meaning that Europe as a whole is most likely still experiencing the effects of the pandemic as well in some way or another.
There has also been a decrease in spending which was the main cause of Germany's GDP going down for the first time since the start of 2021. Timo Klein wrote, "surging inflation weighed on consumers’ real purchasing power" showing that inflation has also been a big cause of the economic decline. Another big reason for the decline in the economy was a gas shortage as a result of the Russian war on Ukraine. They received a lot of their gas from Russia, but the war slowed its production meaning Germany received less.
In order to correct the shrink Germany is looking to bring the gas purchases back to where they were pre-war times and work on the inflation rates in the country to represent where the economy is at currently. They are estimating by doing this and other things that the economy will grow by about 0.2% this year. This prediction was at 0.4% before quarter 4 of last year but due to the major setback their estimates have changed.
Article: German Economy Shrank 0.2% in Q4, Worse Than Expected (usnews.com)
2 comments:
This article is very interesting because it shows how many countries were relying on Russia for gasoline. Gasoline is the measuring tool to see how inflation has effected prices because you see the price of gasoline change everyday. With Germany having to go back to there pre WWII source for gasoline I imagine it is costly and the economy is seeing this happen.
I wonder why Germany has decreased their spending over the last quarter? I'm sure some of it is from buying less gasoline from Russia as well as other goods from the country. Or it could also be another factor that doesn't seem as obvious to people right now. Hopefully China reopening their borders will help Germany bounce back and make up for the decreased transactions with Russia.
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