German economy stagnates in second quarter after winter recession
The Federal Statistical Office of Germany (Destatis) reported that the growth of the country’s economy remained stable in the second quarter of the year compared to the previous quarter, after the technical recession of the winter period.
According to final data from Destatis, Germany’s seasonally and calendar adjusted gross domestic product (GDP) was unchanged in the second quarter of this year compared to the previous quarter. Destatis thus confirmed with pioneering data the 0 percent growth rate announced on July 28.
Compared with the second quarter of last year, the country’s GDP contracted 0.2 percent.
It should be noted that the country’s GDP could not grow for the third time in a row.
Germany’s economy, the largest in Europe and fourth in the world, contracted 0.4 percent in the last quarter of last year and 0.1 percent in the first quarter of the year.
Ruth Brand, director of Destatis, said: “The German economy stabilized in the spring after a slight decline in the previous two quarters.” She used the phrase.
NO PROMPT RECOVERY EXPECTED
The German Central Bank (Bundesbank) announced on August 21 that it expected growth in the country’s economy to remain stable in the third quarter due to weak foreign demand and rising financial costs.
The August Bundesbank economic report noted that the main forecasts indicated that the German economy would post zero growth in the second quarter of the year and that the outlook for the July-September period was not much better.
The report says that weak demand from abroad and rising financial costs due to interest rate increases weighed on the economy, adding that “Germany’s economic output is also likely to remain broadly unchanged in the third quarter.” “. It was said.
IMF: GERMANY IS THE ONLY G7 COUNTRY THAT WILL DO THIS YEAR
According to forecasts by the International Monetary Fund (IMF), Germany will be the only G7 country to contract this year. German companies continue to be at a competitive disadvantage due to high energy prices in the country.
While numerous crises such as the Covid-19 outbreak, supply chain disruptions and the Russia-Ukraine war in recent years have brought weaknesses in the German economy to the surface, the fact that many countries, especially China, being able to produce more and more imported goods from Germany, will further increase the German economy.
On the other hand, China, Germany’s most important trading partner, had many economic problems in this period, while exports to this country were falling.
Germany exported €53.4 billion worth of goods to China in the first half of 2023. This was 9 percent less than in the first half of 2022.
On the other hand, the lack of economic growth in the second quarter also raised the question of whether Germany experienced only a temporary economic downturn or whether it would result in permanent weak growth.
Of note, the Kiel Institute for the World Economy (IfW) predicts that the German economy will grow by just 0.4 percent a year through 2027, just a third of the previous long-term average of 1.3 percent. (AA)