Germany has fallen into recession after a high inflation rate took a bigger toll on the country’s economy than originally estimated.

Output in Europe’s largest economy dropped 0.3% in the first three months of the year, following a 0.5% contraction at the end of 2022, official data showed on Thursday, May 25.

The Federal Statistical Office downgraded its previous estimate of zero growth in gross domestic product compared with the previous quarter. A recession is defined as two consecutive quarters of declining output.

The figures are a blow to the German government, which last month boldly doubled its growth forecast for this year after a feared winter energy crunch failed to materialise. It said GDP will grow 0.4 per cent, up from a 0.2 per cent expansion predicted in late January, a forecast that may now need to be revised downward.

The recession may prove to be short-lived, however, as timelier PMI survey data showed earlier this week that business activity in Germany expanded again in May, despite a sharp downturn in manufacturing.