German Economy Expands 1.9% in 2022

Germany's economy grew by 1.9 percent in 2022, slightly above market expectations of 1.8 percent, but slowing from a 2.6 percent expansion in 2021.

Europe's largest economy was hit by a severe energy crisis due to the war in Ukraine, coupled with stubbornly high inflation, rising borrowing costs, supply constraints and a shortage of skilled workers.

Nevertheless, private consumption was the main driver of growth (4.6 percent vs 0.4 percent), while there were smaller increases in both fixed investment (0.2 percent vs 1.2 percent) and public spending (1.1 percent vs 3.8 percent).

At the same time, net external demand contributed negatively to the GDP as imports rose more than exports.

By industry, the service activities drove the expansion, while the manufacturing sector stagnated and construction output contracted for a second year.