German economy stagnates in second quarter

The German economy stagnated between April and June despite expectations for a slight expansion, official data published Friday showed, adding to fears about the health of Europe’s biggest economy.

Gross domestic product (GDP) came in at zero percent in the second quarter, the federal statistics agency Destatis said in a statement.

The figure was worse than that expected by analysts surveyed by financial data firm FactSet, who bet on a stronger 0.3 percent rebound.

The German economy was already in recession around the turn of the year, with GDP falling in two consecutive quarters.

The economy shrank by 0.4 percent in the last quarter of 2022 and 0.1 percent over the first three months of 2023, according to revised figures from Destatis.

The limp performance in the second quarter will do little to quell doubts about the state of the German economy, which was hit hard by the Russian invasion of Ukraine and the ensuing sharp rise in energy prices.

The German economy was 0.2 percent smaller in the second quarter of 2023 than it was a year ago on a calendar-adjusted basis, Destatis said.

Germany “seems to be stuck in the twilight zone between stagnation and recession”, said Carsten Brzeski, head of macro at the ING bank.

“Germany is very clearly at the back of the pack in Europe,” added Jens-Oliver Niklasch of LBBW bank.

“For the third quarter, the overall signs are pointing to contraction again.

“In all probability, a negative result for GDP growth will be recorded for 2023 as a whole.”