World

Europe’s largest economy Germany enters recession

Europe’s biggest and world’s fourth largest economy Germany has been confirmed to be in recession. After which its effect has been seen on the world markets.

The euro had fallen sharply on Thursday. At the same time, the dollar is growing stronger than in two months. For this reason, the dollar is stronger than the rest of the currency in the world.

Rating agency Fitch has raised questions about this. The agency has placed the United States in the negative category of “AAA” debt rating. This is a prelude to a possible downgrade due to disagreements between the government and the opposition on whether to raise the debt ceiling in the US. Germany’s economy, which is called the engine of Europe, has come into economic recession. Meanwhile, the threat of America’s default also looms which could be catastrophic for the global economies.

New data shows that there has been an unexpected decline in Germany’s economy in the first quarter of the current year. Germany’s gross domestic product (GDP) declined by 0.3 percent in January-March, according to data released by the Federal Statistics Office on Thursday.

Even in the last quarter of 2022, Germany’s GDP had declined by 0.5 percent. A decline in GDP for two consecutive quarters technically qualifies as a recession. These figures are a big blow to the German government. Only last month, the government doubled its growth forecast for this year.

The government had said that the country’s economy would grow at the rate of 0.4 percent. It was estimated to grow at a rate of 0.2 percent in January. Economists say consumer spending has been affected by high inflation. Prices in April are 7.2 percent higher than a year ago.

Germany is the fourth largest economy in the world and the largest in Europe, after the United States, China and Japan. It is the third largest exporting country globally. The largest contribution to the country’s GDP is from the service sector, which is close to 70 percent.

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