German economy stagnates in Q2 after winter recession
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Germany’s economy stagnated in the second quarter from the previous three months, showing no sign of recovery from a winter recession and cementing its position as one of the world’s weakest major economies.
The figure of zero growth for the second quarter was in line with a first estimate published in late July. Year on year, adjusted GDP contracted by 0.2% in the second quarter.
Quarter on quarter, economic activity had fallen by 0.4% in the fourth quarter of 2022 and by 0.1% in the first quarter of 2023. Two consecutive quarters of contraction fulfills the technical definition of a recession.
“Both the short-term and the longer-term outlook for Germany looks anything but rosy,” said Carsten Brzeski, global head of macro at ING.
Weak purchasing power, thinned-out industrial order books, a slowdown in the Chinese economy and the impact of the most aggressive monetary policy tightening in decades all point to weak economic activity in Germany going forward, Brzeski said.Household consumption showed zero growth in the second quarter from the first and government spending rose by 0.1%. Capital investment also grew modestly while exports fell 1.1%, Friday’s data showed.
