Whatâs Going On Here?Reports out on Wednesday suggested Germany might just have dodged a recession. What Does This Mean?When Russia first invaded Ukraine, Germany seemed all but destined for a recession â you know, those pesky back-to-back quarters of negative growth. So after the economy shrank 0.4% at the end of last year, the first quarter of 2023 was always going to be pivotal. The verdict: if Germanyâs top forecasters are worth their weight in bratwurst, the country may actually have sidestepped a recession, with the economy growing an estimated 0.1% last quarter. That would mean the countryâs managed to weather the energy crisis, reducing its reliance on Russian natural gas and softening the impact of higher energy prices on households. No wonder the economyâs looking up, then: instead of a 0.4% drop this year, economists now see 0.3% growth in the cards for Germany. Why Should I Care?Zooming in: Lucky streak.
That wasnât the only bit of good news Germany got this week. Factory orders rose by 4.8% in February, crushing expectations of a measly 0.3% increase â a good sign given how crucial manufacturing is to the nation. And German exports outstripped expectations too, with a 4% uptick in February â while business confidence climbed for the fifth consecutive month in March. And sure, enduring demand might slow down inflation's retreat, but for now, that's a small price to pay to fend off a recession.
The bigger picture: Itâs a win-win-win.
It isn't just a win for Germans if their economy is getting back on track: it's a victory for the entire world. See, the country is Europe's biggest economy, and its success could help stave off a recession for the whole bloc. And as a major investor in other nations, a thriving Germany bodes well for foreign investment and trade to boot. And thatâs not to mention that Germansâ famous gift for tech innovation â especially in engineering â could help drive progress in key sectors worldwide. | 