FRANKFURT, Aug 26 — Germany’s economy stagnated in the second quarter, final official data confirmed yesterday, 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.
The economy was supported by improved consumption and rising investments but exports — a key contributor to German GDP — fell slightly.
The data will 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.
“We continue to see economic difficulties triggered by the aftermath of the energy crisis, the (European Central Bank’s) necessary fight against inflation and the weakening of important global economic partners,” said Economy Minister Robert Habeck in a statement.
“The restrictive interest rate environment and weak global economy — especially developments in China — are making it difficult for us as an exporting nation.”
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.”
Habeck, however, insisted that, in the domestic economy, the “first rays of hope” were becoming visible.
“Net incomes have recently risen slightly in real terms, private consumption has stabilised, the inflation rate is continuing to fall,” he said.
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 per cent in July, mainly on the back of falling energy prices, but it is still far above the ECB’s two-per cent target. — AFP
