German economy unexpectedly shrinks in second quarter
Output contracted slightly by 0.1 per cent compared with the previous three months
THE German economy unexpectedly shrank in the second quarter, preliminary data showed on Tuesday (Jul 30), pouring cold water on hopes of a tentative recovery in Europe’s largest economy.
Output contracted slightly by 0.1 per cent compared with the previous three months, federal statistics office Destatis said, after expanding by 0.2 per cent in the first quarter.
The second-quarter data surprised analysts surveyed by FactSet who had forecast 0.1 per cent growth.
The April-to-June period had a notable decline in investments in equipment and construction, Destatis said.
Germany, traditionally a driver of European growth, was the only major advanced economy to shrink in 2023 as it battled high inflation, a manufacturing slowdown, and cooling export demand.
A string of indicators had suggested a recovery was getting under way at the start of the year, but hopes of a strong rebound have been tempered by weaker data in recent weeks.
“Germany is performing very poorly at the moment, especially in comparison with neighbouring European countries where we have seen quite robust growth figures,” said Landesbank Baden-Wurttemberg economist Jens-Oliver Niklasch.
“Of course, Germany’s export-orientated industry is more exposed to the weakness of the Chinese economy, for example, but many of the problems are homemade,” he added. AFP
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