The German economy does not know about regional elections in the Canary Islands. While TUI says it is seeing encouraging booking trends for the summer and next winter, results from airlines such as Ryanair, Wizz Air and easyJet have indicated that consumers are preparing for their holidays. At TUI, reservations for the winter and summer seasons of 2023 reached 8,7 million.
A technical recession in the winter semester is off the table for the moment. In the second half of the year, industrial buildup will have slowed without strong new demand coming in, the impact of the most aggressive monetary policy tightening in decades will fully play out, and a slowdown in the U.S. economy will hit German exports.
However, the German economy stagnated in the first quarter, as a drop in government and household consumption was offset by an increase in exports and capital investment. GDP was unchanged quarter-on-quarter in adjusted terms, the federal statistics office said. The German economy remained stuck in the mud in early 2023, barely avoiding recession. It contracted a revised 0,5% in the fourth quarter of 2022 compared to the previous three months, reviving fears of a technical recession, defined as two consecutive quarters of contraction.
With the fourth quarter result also revised downwards, that left the overall economy in line with its pre-pandemic level, while GDP is significantly above that mark in Italy and France. The German government raised its economic growth forecast for this year to 0,4% from the 0,2% previously forecast. A gradual recovery is underway, despite a persistently difficult environment, and an acceleration in growth is expected after the first quarter. But Canarian economists warn that the euro zone's largest economy has not yet escaped the risk of a recession.
