Wachstumskurve mit Kugelschreiber symbolisiert die wirtschaftliche Lage.

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  • By the end of 2022, the dynamic development of the German economy slowed noticeably. In the fourth quarter of 2022, GDP declined by 0.2% compared with the previous quarter. The annual figure was revised downward by one tenth to 1.8%. Consumer spending and investment in particular are likely to have developed more weakly in the fourth quarter. Industry continues to struggle with a high level of uncertainty and high energy prices.
  • Current indicators support the expected economic slowdown in the winter half-year 2022/23, but suggest that it is likely to be rather limited. Nevertheless, the rise in prices which is putting an increasing burden on consumers, uncertainties about the economic outlook and rising interest rates weighed down on economic activity at the beginning of the year and caused a reluctance to invest.
  • According to the ifo surveys, the mood in German business continued to brighten in January. Almost all sectors of the economy were more confident than before. This is a further indication that there will only be a slight recession in the winter.
  • Industrial production experienced a setback at the end of the year. While the automotive sector expanded noticeably, output in other sectors such as mechanical engineering fell significantly. However, the downward trend in manufacturing orders seen since February of last year did not continue in December.
  • Christmas sales in the retail sector were weak. Retail turnover fell significantly in December compared with the previous month. By contrast, the positive trend in consumer sentiment continued.
  • At an expected +8.7%, the inflation rate in January remained clearly below the 10% threshold. The situation at the upstream sales levels has also eased in recent months as a result of falling energy prices.
  • The labour market remains tight despite the decrease in economic activity. The increase in employment continued recently, and the number of unemployed fell on a seasonally adjusted basis. Leading indicators point to a rising willingness of companies to recruit staff and a further decline in unemployment.


According to preliminary data of the Federal Statistical Office, Germany’s economic output fell slightly in the final quarter of 2022 and was down by 0.2% compared with the previous quarter in price-, calendar- and seasonally adjusted terms. Economic momentum at the end of the year was thus somewhat weaker than initially assumed. Accordingly, the Federal Statistical Office corrected the annual GDP figures for 2022 to 1.8%. Consumer spending and investment in particular are likely to have been rather weak in the fourth quarter. As regards consumer spending of private households, the increasingly noticeable price increases and the associated loss of purchasing power are having a dampening effect. This also affects the consumer-related service sectors. Furthermore, given the uncertain economic outlook and rising interest rates, it is likely that investment projects will be put on hold for the time being.

Production in the industrial sector decreased noticeably at the end of the year. The energy-intensive sectors in particular once again cut back their production. In addition to the cold weather in mid-December, rising interest rates and continued high material costs are likely to have had a negative impact on the construction sector. On the positive side, there is the recent increase in new industrial orders, the more optimistic business outlook across all sectors according to surveys, and the decline in shortages of materials. Together with the still well-filled order books, this indicates that while there will be a noticeable economic slowdown in the winter half-year 2022/23, it is unlikely to be severe.


Current indicators show a generally weak development in the global environment. World trade decreased noticeably by 2.5% in November month-on-month, following a decline of 1.4% in October. Global industrial output fell by 0.2% (October: -0.8%). The latest indicators of market sentiment point to a continued sluggish development in the coming months.


The nominal value of all imports of goods and services decreased significantly in December compared to the previous month (-4.9%). Imports of goods and services also showed a sharp decline in nominal terms (-5.7%). In contrast to previous months, the marked decline in exports and imports was not primarily driven by price developments. Export prices remained virtually unchanged month-on-month at a rate of change of +0.1%, while import prices slipped slightly by -1.6%. It is therefore likely that most of the nominal decline in exports and imports will remain in real terms.

This shows that German foreign trade is also being affected by the current weakness of the global economy. Small export gains made in previous months were offset by the poor performance in December. However, the continued fall in import prices means a slight improvement in the terms of trade of the German economy. The monthly trade surplus increased again in December to 10.6 billion euros, rising slightly above the level of the previous month. At the height of the energy price crisis in August, the trade balance showed a negative balance of 1.6 billion euros.

The outlook for foreign trade remains subdued due to the global economic downturn. The sentiment indicator of S&P Global rose slightly in January for the second time in succession but at 49.8 points it remains just below the growth threshold of 50 points. Sentiment in the services sector was better than in the manufacturing. The ifo export expectations increased slightly in January from a low level. They now stand at +4.3 balance points. To put this figure into perspective: Before the outbreak of the war in Ukraine, the index was still at around 15 balance points. It is positive news that the recovery from the material shortages continues. In the ifo survey conducted in December, for example, only 50.7% of companies said they were still affected by shortages of intermediate products. This compares to 59.3% in the previous month. Likewise, container freight rates on the Asia-Europe route have now almost returned to pre-crisis levels.


According to the Federal Statistical Office, output in the goods-producing sector fell considerably by -3.1% as compared to the previous month. Output in the construction sector in particular fell sharply (-8.0%), mainly due to the cold weather in mid-December. The industrial sector saw a decline of 2.1%. The energy and water supply sector were down again (-2.3%) following a recovery in the previous month.

The development of output varied in the individual industrial sectors: Although the important sector of vehicles and vehicle parts continued to expand strongly by (+3,3%), output in the similarly large mechanical engineering sector declined significantly (-3.8%). The particularly energy-intensive sectors grew below average at the end of the year. In particular, there was a sharp decrease in the chemical sector (-11.2%) and the paper and cardboard sectors (-7.6%). By contrast, the manufacture of pharmaceutical products grew strongly and was up by +12.9%.

New manufacturing orders rose by 3.2% between November and December. Orders thus did not continue the downward trend seen since February of last year. Excluding large-scale orders, there was a slight decrease of 0.6%. Overall, latest figures show the level of new orders, adjusted for workday fluctuations, at 10.1% below the level seen in the same month a year before. In a month-on-month comparison, both domestic and foreign demand increased (+5.7% and +1.2%, respectively). Orders from the eurozone showed a particularly strong increase of +9.8%, while orders from the non-eurozone were down 3.8%.

The mood in German industry brightened again in January. Business expectations were noticeably less pessimistic and assessments of the current situation improved. This, together with well-filled order books and diminishing shortfalls of material, suggests that the degree of the economic slowdown in the winter half-year is fairly small.


Despite the Christmas season, retail turnover (excluding vehicles) fell by 5.3% in December compared with the previous month. In comparison with December 2021, the retail trade reported a (real) fall in turnover of 6.6%, which to a large part also reflects the high price increases in the retail sector, especially for food. In nominal terms, i.e. unadjusted for prices, annual turnover increased by 3.9%. Food retailing recorded a month-on-month decline of 4.7% in December in real terms (-9.1% down on the same month the year before). Trade excluding food declined by 3.7% (+2.6% on the same month the year before). Online and mail-order sales recorded a fall, down 3.8% in December (compared to -7.2% in the same month of the previous year). In 2022 as a whole, retail sales declined by 0.6% year-on-year. The drop in sales was particularly pronounced in the online and mail-order business (-7.2%). Sales decreased by 1.9% compared to the period before the outbreak of the pandemic (December 2019). New car registrations of passenger cars by private owners fell sharply by 39.8% in January, following increases of 14.6% and 21.5% in November and December respectively. The development towards the end of the year is likely to have been strongly influenced by the reduction or expiry of subsidies for e-cars and passenger cars with hybrid drive systems.

The climate among private consumers brightened further at the beginning of 2023. According to the GfK Consumer Climate Survey, February is expected to see the fourth improvement in a row. Although consumer sentiment is still at a low level, a positive trend is visible. The high level of pessimism has subsided a good deal which is probably due not least to the stabilisation measures adopted by the German government. In addition to lower prices on the markets, these measures have brought energy costs down again. The positive trend in the ifo business climate for the retail sector also continued in January. This applies both to the assessment of the current situation, which was only slightly negative on balance, and to business expectations.


The inflation rate in Germany, measured as the year-on-year change in the consumer price index (CPI), stood at +8.7% in January 2023. Relative to the month-earlier figure, consumer prices rose in January by 1.0 %. The Federal Statistical Office has completed a regular revision introducing the new base year 2020 as of reporting month January 2023. As usual, figures for individual groups of products have not yet been provided. Moreover, a comparison of the figures recently announced for January 2023 with the time series based on the 2015 basket of goods is only of limited use.

It is expected that the gas and electricity price brakes in force from January will ensure in the course of the year that inflation rates do not go as high as last year’s peak inflation rates of over 10%. This is also supported by the fact that the situation at the upstream sales levels has eased in recent months as a result of falling energy prices. For example, month-on-month price inflation at the producer level fell in December for the third month in a row (-0,4 %, Nov.: -3,9 %; Oct.: -4,2 %), mainly as a result of the month-on-month decline in energy prices (-1,0 %, Nov.: -9,6 %; Oct.: -10,4 %). Wholesale selling prices also decreased in December compared to November (-1.6%). Compared to the previous year, however, they still rose by 12.8%. The situation was similar for import prices in December (-1.6% compared to the previous month; +12.6% compared to the previous year).

In its annual projection of 25 January, the German government expects consumer prices to rise by 6.0% in 2023. Brakes on the prices of gas and electricity alleviate the delayed pass-through of higher procurement prices by utilities to private households, including retroactively for January and February.


Despite the economic slowdown at the turn of the year, the labour market shows an overall positive trend: The increase that usually occurs in registered unemployment at the beginning of the year was comparatively small, resulting in a decrease of 15,000 persons in seasonally adjusted terms. Employment continued to rise in December (+24,000). Employment in jobs subject to social security contributions was up significantly in November (+30,000). The use of short-time work increased to around 210,000 people in November. Short-time work is likely to have remained at an elevated level in December.

Leading indicators have brightened considerably. The number of reported vacancies has stabilised. The labour market barometers of ifo and IAB point to a rising willingness of companies to recruit staff and a further decline in unemployment. With regards to consumer-related trade, the outlook is still subdued but employment prospects have improved significantly in this sector as well. In fact, the labour shortage has become the more pressing issue for many companies. The IAB’s labour shortage index rose to a new record high in January.


1This report is based on data that were available as of 10 February 2023. Unless stated otherwise, these are rates of change against the respective preceding period on the basis of price-adjusted figures which have also been adjusted for calendar-day and seasonal variations.