Half-year Financial Report January – June 2023

Macroeconomic development

According to the International Monetary Fund (IMF), the global economy’s recovery from the coronavirus pandemic and Russia’s war of aggression against Ukraine slowed in the first half of 2023. Although supply chains have recently normalised to a large extent and transport costs and delivery times have returned to pre-pandemic levels, the barriers that already impeded growth in the past year persisted in the first six months of 2023. As a result, inflation remained high and continued to weaken consumer spending. The economic upturn was also slowed by a tightening of monetary policy in response to persistently high inflation. While the global economy – mainly driven by the services sector – proved to be robust in the spring, early indicators in mid-year showed a broad slowdown in economic activity.

Whereas the Chinese economy grew by 2.2 % in the first quarter of 2023, flagging domestic and foreign demand brought economic growth in the world’s second-biggest economy to an almost complete standstill in the second quarter. China’s gross domestic product (GDP) grew by just 0.8 % from April to June, compared with the previous quarter. The rapidly declining momentum following the coronavirus pandemic has recently increased the pressure on the Chinese government to take further economic measures to stimulate the economy. At the same time, the danger of exacerbating debt risks and intensifying structural distortions through overly aggressive economic stimulation has grown.

The effects of the war in Ukraine on the major European economies have been more negative than anticipated. In the eurozone, there was an unexpected drop in economic output of 0.1 % in the first quarter, compared with the previous quarter. After already contracting by 0.1 % in the fourth quarter of 2022, the eurozone is therefore in a so-called technical recession. According to the IMF, the German economy is suffering above all from the current weakness of its industrial sector due to high energy prices. In addition, Germany is feeling the effects of weak global trade. This is also reflected in Germany’s foreign trade: whilst exports from January to May 2023 increased by 4.5 % year-on-year, exports in May 2023 declined by 0.1 % compared with the previous month. Imports decreased by 2.7 % in the first five months compared with the same period of the previous year.