German economy stagnates in Q2 after winter recession

THE German economy stagnated in the second quarter compared to the previous three months, following a winter recession, data from the statistics office showed on Friday (Aug 25).

The figure of zero growth for the three months to July was in line with a first estimate published in late July. Year on year, adjusted gross domestic product contracted by 0.2 per cent in Q2.

Quarter on quarter, economic activity fell by 0.4 per cent in Q4 of 2022 and by 0.1 per cent in the Q1 of 2023. Two consecutive quarters of contraction commonly define a recession.

Household consumption showed zero growth in Q2 from the previous quarter, and government spending rose by 0.1 per cent. Capital investment also grew modestly while exports fell 1.1 per cent, Friday’s report showed.

The Bundesbank expects economic output to remain largely unchanged again in Q3, according to a monthly report published on Monday.

A resilient labour market, strong wage increases and declining inflation should boost private consumption, but industrial production will remain weak due to sluggish foreign demand, the report said. REUTERS