According to revised data, the German econ￾omy continued to contract in the first quarter of 2023,1 which meant that it was in a tech￾nical recession in the past winter half-year.2 The decline in real gross domestic product (GDP) in the winter half-year was in line with the ex￾pectations expressed in the December 2022 projection.3 However, real gross value added (GVA) saw only a comparatively small decrease overall and even rose sharply in the first quar￾ter.4 GDP is also expected to edge up again slightly in the current quarter, although some strains remain.5 External industrial demand continues to fall and is weighing on output and exports. Higher financing costs are dampening investment, pushing down domestic demand in a number of industrial sectors and in con￾struction. However, supply bottlenecks con￾tinue to dwindle in importance and the still very high order backlog is providing support. In addition, despite inflation still being high, households are slowly experiencing more scope for spending again, as inflation is in fact easing and wages are rising steeply. Furthermore, em￾ployment is growing. Beneficiaries of this envir￾onment are private consumption and service providers, which are likely expanding signifi￾cantly. Finally, government consumption is ex￾pected to pick up again, having fallen sharply in the first quarter due to pandemic-related ex￾penditure petering out.