Spiegel: German economy stagnates in second quarter

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German economy stagnates in second quarter

The German economy is treading water. Between April and June, growth in gross domestic product was zero

The German economy stopped growing in the spring. Gross domestic product remained unchanged between April and June compared with the previous quarter, as reported by the Federal Statistical Office on Friday. Economists had expected a plus of 0.1 percent. At the beginning of the year, however, the economy had performed better than expected: Destatis revised the GDP plus for the first quarter upward to 0.8 percent from the 0.2 percent initially mentioned.

The economy was supported in the spring primarily by private and government consumer spending, while net exports dampened economic growth. “The difficult global economic conditions with the ongoing corona pandemic, disrupted supply chains, rising prices and the war in Ukraine are clearly reflected in the economic development,” the Wiesbaden-based statisticians explained.

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German Economics Minister Robert Habeck recently spoke of the “biggest energy crisis in Germany” – triggered by heavy dependence on Russia.

Meanwhile, the various indicators give little reason for confidence: According to GfK consumer researchers, the spending behavior of people in Germany has now changed noticeably. Consumers are tightening their belts when it comes to everyday goods such as food and personal care products. Consumer sentiment recently sank to an all-time low. “In addition to concerns about interrupted supply chains, the Ukraine war and sharply rising energy and food prices, there are now fears about sufficient gas supplies for the economy and private households next winter,” explained GfK consumer expert Rolf Bürkl.

At the same time, business sentiment has deteriorated significantly. The Ifo business climate, for which around 9,000 companies assess their current business situation and expectations for the next six months, fell in July to its lowest level in a good two years. “Germany is on the threshold of recession,” said Ifo President Clemens Fuest. “High energy prices and looming gas shortages are weighing on the economy.”

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Commerzbank chief economist Jörg Krämer even believes that the German economy may already be in a downturn. How bad things end up is primarily in the hands of Russian President Vladimir Putin, he said. “If there were a complete halt in gas supplies, a deep recession would be inevitable.” That means the German economy would shrink rather than grow.

According to the EU Commission, Europe’s largest economy is expected to grow by only 1.4 percent this year. The International Monetary Fund (IMF) believes that the current year will only see growth of 1.2 percent.

the source used in the preparation of the news: https://www.spiegel.de

 

Salih Demir

Salih Demir lives in Germany. He is interested in politics and economy. Germany editor of -ancient idea- fikrikadim.com

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