Germany: GDP grew by 0.1% in the second quarter, slightly more than initially announced

The threat of a recession is receding somewhat for Germany. The gross domestic product (GDP) of the largest European economy rose by 0.1% in the second quarter, when a stagnation had initially been announced.

In one year, GDP increased by 1.7% and reached the level prior to the health crisis, at a time when the consequences of the war in Ukraine weigh on industry, the Federal Statistical Office (Destasis) reported on Thursday. it’s a statement.

“The economy was mainly driven by private and public consumer spending,” explains Destatis, with consumers “taking advantage of the end of health restrictions” to travel or spend more “despite rising prices.”

In its first estimate at the end of July, Destatis had announced zero growth after a small rebound of 0.8% of GDP during the first three months of the year.

One of the worst results in the euro zone

However, Germany posted one of the worst results in the euro zone in the second quarter. The war in Ukraine ended the strong economic rebound that began a year ago after the historic recession caused by the Covid-19 pandemic in 2020.

The rise in energy prices caused by the conflict especially penalizes the powerful German industry. Added to this is the impact of Beijing’s policy against Covid-19, which has caused confinements and factory closures in China, Germany’s largest trading partner.

And although the economy has performed better than expected, most indicators have deteriorated recently.

German industry weighed down

Private-sector economic activity, as measured by the S&P Global Composite PMI, contracted in August in the euro zone, with Germany suffering its biggest drop in more than two years, due to a drop in output and an accelerating contraction in the services sector.

In the second quarter, the industrial component of GDP fell, weighed down in particular by the slowdown in production in the chemical and metallurgical industries.

The head of the German central bank was pessimistic in a recent interview: “The German economy performed well again in the first half of the year under difficult conditions. But if you add new supply problems, (…), the economic prospects for the second half will darken even more”, warned Joachim Nagel.