German economy stagnates in second quarter after winter recession

The German economy stagnated in the second quarter compared to the previous three months, following a winter recession, data from the statistics office showed on Friday.

The figure of zero growth for the three months to July was in line with a first estimate published in late July. Year on year, adjusted GDP contracted by 0.2 per cent in the second quarter.

Quarter on quarter, economic activity had fallen by 0.4 per cent in the fourth quarter of 2022 and by 0.1 per cent in the first quarter of 2023. Two consecutive quarters of contraction commonly define a recession.

Household consumption showed zero growth in the second quarter from the first and government spending rose by 0.1 per cent. Capital investment also grew modestly while exports fell 1.1 per cent, Friday’s report showed.

The Bundesbank expects economic output to remain largely unchanged again in the third quarter, according to a monthly report published on Monday.

A resilient labour market, strong wage increases and declining inflation should boost private consumption, but industrial production will remain weak due to sluggish foreign demand, the report said.