https://www.bbc.com/news/business-65707206 BBC Homepage * Skip to content * Accessibility Help * Your account * Home * News * Sport * Reel * Worklife * Travel * Future * More menu More menu Search BBC * Home * News * Sport * Reel * Worklife * Travel * Future * Culture * Music * TV * Weather * Sounds Close menu BBC News Menu * Home * War in Ukraine * Climate * Video * World * US & Canada * UK * Business * Tech * Science More * Stories * Entertainment & Arts * Health * In Pictures * Reality Check * World News TV * Newsbeat * Long Reads * Business * Market Data * New Economy * New Tech Economy * Companies * Technology of Business * Economy * CEO Secrets * Global Trade * Cost of Living Germany falls into recession as inflation hits economy * Published 2 days ago Share close panel Share page Copy link About sharing Man with industrial robot - stock photoImage source, Getty Images By Lucy Hooker Business reporter, BBC News Persistent inflation has helped push Germany into recession in the first three months of the year, an upgrade to growth data shows. Europe's largest economy was also badly affected when Russian gas supplies dried up after the invasion of Ukraine, analysts said. The economy contracted by 0.3% between January and March, the statistics office said. That followed a 0.5% contraction in the last three months of last year. A country is deemed to be in recession when its economy shrinks for two consecutive three-month periods, or quarters. "Under the weight of immense inflation, the German consumer has fallen to his knees, dragging the entire economy down with him," said Andreas Scheuerle, an analyst at DekaBank. Germany's inflation rate stood at 7.2% in April, above the euro area's average but below the UK's 8.7%. Higher prices have weighed on household spending on things such as food, clothing and furniture. Industrial orders are also weaker, reflecting the impact of higher energy prices on businesses. "The persistence of high price increases continued to be a burden on the German economy at the start of the year," the federal statistics agency Destatis said in a statement. * Which European nations are winning the heat pump race? * Germans split as last nuclear plants are shut down * Why is UK inflation higher than US and Germany? Originally, the agency had estimated zero growth for the first quarter of this year, suggesting Germany would side-step a recession. However, the revised figures showed household spending was 1.2% lower than in the previous quarter. Government spending was 4.9% lower, and car sales also fell after government grants for electric and hybrid cars were scaled back. The recession was less severe than some had predicted, given Germany's heavy reliance on Russian energy. A mild winter and the reopening of China's economy, helped ease the impact of higher energy prices. Private sector investment and exports rose, but that was not enough to get Germany out of the "danger zone" for recession, analysts said. "The early indicators suggest that things will continue to be similarly weak in the second quarter [of 2023]," said LBBW bank analyst Jens-Oliver Niklasch. However, the German central bank, the Bundesbank, expects the economy to grow modestly in the April to June quarter, with a rebound in industry offsetting stagnating consumer spending. The IMF has predicted that Germany will be the weakest of the world's advanced economies, shrinking 0.1% this year, after it upgraded its forecast for the UK from minus 0.3% to growth of 0.4%. Related Topics * Europe economy * Germany * Personal finance * Inflation More on this story * Which European nations are winning the heat pump race? + Published 12 May Heat pump installation outside * Germans split as last nuclear plants are shut down + Published 16 April Protest against nuclear power outside the Bundestag in Berlin, November 2022 * 'Mega strike' halts Germany's transport network + Published 27 March Protestors demonstrate in Hamburg Top Stories * Turks decide if Erdogan should have 5 more years + Published 2 hours ago * Hundreds of expelled Germans set to leave Russia + Published 8 hours ago * McCarthy confident of US debt ceiling deal in time + Published 6 hours ago Features * Friend to foe: How Imran Khan took on Pakistan's army Imran Khan * Cairo masterplan threatens ancient City of the Dead Demolished tombs next to a flyover being built in Historic Cairo * Fanfare, flags and fire: Photos of the week Queen Camilla meet characters representing legendary and historical characters associated with Armagh during a visit to Market Theatre Square, Armagh, Co Armagh as part of a two day visit to Northern Ireland. May 25, 2023. * * Why South Korea pays young recluses to leave home Yoo Seung-gyu * The five tests awaiting Nigeria's new president Bola Tinubu in March 2023 * How Jords became the first UK rapper on Motown Jords * Who are India's next cricketing stars? Yashasvi Jaiswal celebrates after winning the IPL match between Kolkata Knight Riders and Rajasthan Royals on May 11 * The benefits of intermittent fasting. VideoThe benefits of intermittent fasting Food and cutlery on a plate * What five more years of Erdogan would mean A supporter of President Erdogan waves a Turkish flag at a taxi driver convention Elsewhere on the BBC * Why it's 'imperative' to start using AI coworkers * Jellyfish blooms: Why not just eat them? Jelly fish * A 5,000-year-old craft under threat Lovely town Most Read 1. 1 India official drains entire dam to retrieve phone 2. 2 Russia envoy in warning of escalation in Ukraine 3. 3 Hundreds of expelled Germans set to leave Russia 4. 4 Turks decide if Erdogan should have 5 more years 5. 5 Twitter pulls out of voluntary EU fake news code 6. 6 Police arrest 1,500 climate activists in Netherlands 7. 7 Funeral home director guilty over rotting bodies 8. 8 Alarm over cosmetic surgery-linked fungal outbreak 9. 9 Svitolina donates winnings to Ukrainian children 10. 10 'We're ready to begin counter-offensive' - Ukraine BBC News Services * On your mobile * On smart speakers * Get news alerts * Contact BBC News * Home * News * Sport * Reel * Worklife * Travel * Future * Culture * Music * TV * Weather * Sounds * Terms of Use * About the BBC * Privacy Policy * Cookies * Accessibility Help * Parental Guidance * Contact the BBC * Get Personalised Newsletters * Why you can trust the BBC * Advertise with us (c) 2023 BBC. The BBC is not responsible for the content of external sites. Read about our approach to external linking.