German GDP stagnation confirmed as inflation weighs
Germany’s economy stagnated in the second quarter, final official data confirmed Friday, adding to a bleak outlook as the country battles an industrial slowdown and stubborn inflation.
Europe’s biggest economy registered zero growth from April to June compared to the previous quarter, according to complete data from the federal statistics agency Destatis.
Preliminary data released last month showed the same reading, and it was in line with a forecast from analysts surveyed by financial data firm FactSet.
By registering flat growth, Germany officially exited a downturn that it fell into around the turn of the year after the economy contracted for two straight quarters, the technical definition of a recession.
“After slight declines in the previous two quarters, the German economy stabilised in the spring,” said Destatis president Ruth Brand.
The economy was supported by improved consumption and rising investments. However, exports—a key contributor to German GDP—fell slightly from the previous quarter, it said.
The figures will, however, bring little comfort to policymakers battling myriad economic fires.
These range from still-high inflation that began surging when Russia invaded Ukraine, to lacklustre exports as key markets such as China face trouble, weakness in manufacturing, and the impact of interest rate rises.
The IMF has forecast that Germany will be the only major advanced economy to shrink this year.
ING economist Carsten Brzeski said the data will “do very little to end the debate on Germany being the new sick man of Europe.
“In fact, both the short-term and the longer-term outlook look anything but rosy.”
Earlier this week, the Bundesbank central bank added to the flurry of bleak assessments, predicting Germany’s “lacklustre” economy will continue to stagnate in the third quarter.
It is “still experiencing a period of weakness”, the bank said in its monthly report.
Germany’s annual inflation rate slowed to 6.2 percent in July, mainly on the back of falling energy prices, but it is still far above the European Central Bank’s two-percent target.
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