The German Federal Statistical Office (Destatis) has announced the final growth data for the German economy for the second quarter of the year.
Accordingly, seasonally and calendar adjusted gross domestic product (GDP) in Germany decreased by 0.1 percent in the 2nd quarter of the year compared to the previous quarter. Thus, Destatis confirmed the 0.1 percent reduction, which it announced with leading data on July 30.
Germany's economy, the largest in Europe and the third largest in the world, shrank 0.4 percent in the last quarter of last year, while expanding 0.2 percent in the first quarter of the year.
Destatis President Ruth Brand said that after a slight increase in the previous quarter, the German economy slowed again in the spring months.
Equipment investments fell by 4.1 percent
The GDP of the country, free of seasonal and calendar effects, did not grow compared to the 2nd quarter of last year.
Considered on a quarterly basis, GDP was negatively affected by equipment investments, especially in machinery, devices and vehicles. In the second quarter, equipment investments decreased by 4.1 percent compared to the previous quarter, while public spending increased by 1 percent.
Construction investments decreased by 2 percent and exports of goods and services decreased by 0.2 percent.
In the same period, household consumption expenditures increased by 0.1 percent.
German economy at risk of recession
The German economy, which was struggling to grow, showed weaker development in the second quarter compared to other European countries such as Spain and France.
While economic growth in France, the second largest economy in the Eurozone, exceeded expectations by 0.3 percent in the second quarter of the year, the Spanish economy also grew by 0.8 percent in this period.
Meanwhile, the Central Bank of Germany expects the German economy to grow very little in the current third quarter.
The Economic Research Institute, one of Germany's leading economic think-tanks, considers that even a further decrease in GDP is possible in the third quarter.
If the German economy shrinks in the third quarter, it will be in a technical recession.
While the technical recession was expressed as a reduction in GDP for two consecutive quarters, Germany experienced a recession for the first time since 2009 in 2020, the first year of the pandemic after 10 years of good economic growth.
The German government expects the economy to grow by 0.3% this year.
The economy is stuck in recession
Carsten Brzeski, Head of Global Macro Research at ING and Chief Economist of Germany, said: "Weak household consumption and the decline in the construction sector led the German economy to contract again in the second quarter. Although the outlook in the economy is not very bright, it is still too early to lose hope.
Stating that German GDP growth in the first quarter was a positive surprise and the improvement of confidence indicators in the economy gave rise to the hope that the pessimism of the last few years has been left behind and that debates about whether Germany ⁇ ⁇ Europe ⁇ is a sick man ⁇ can be put aside, Brzeski said, ⁇ But the truth is that GDP growth in the first quarter was due to mild winter weather and a downward revision of the fourth quarter GDP ⁇ . Therefore, there was no situation that could be described as a sustainable and healthy growth story.
Brzeski pointed out that the prospects for a consumer-focused recovery in the German economy in the second half of the year have been hit yet again by the decline in consumer confidence today, ⁇ The fact is that the German economy is currently learning the hard way what it means to be in the midst of cyclical winds and structural changes. The economy is stuck in recession. ⁇ commented.
