Germany narrowly emerged from the technical recession, thanks to its gross domestic product (GDP) stagnating in the second quarter of this year after two winter quarters of consecutive decline in growth. The GDP of the first economy in Europe registered zero growth between April and June, according to the final data published this Friday by the Federal Statistical Office (Destatis), which confirm the provisional figures that advanced at the end of July.
In the two previous quarters, the German economy had registered contractions, of 0.1% in the first quarter of this year and 0.4% in the last of 2022, according to corrected data on prices and seasonal variations. “After slight declines in the previous two quarters, the German economy stabilized in the spring,” Ruth Brand, president of Destatis, said in a statement.
All in all, the German locomotive continues to falter, with lower results than other neighbors in the eurozone. Industrial production is still weak (it grew only 0.1% in the quarter) and slow global growth caused a 1.1% drop in German exports, the traditional battering ram of this country's economy. The drop in foreign demand was noted above all by China, its main customer.
One positive piece of data is the slight increase in consumer spending, which rose 0.1% after two consecutive quarterly declines, Destatis said. This is due to the fact that the German labor market remains solid and there have been wage increases, in addition to the fact that inflation is trending downward, even though it remains high (6.5% in July).
In its August monthly bulletin, published earlier this week, the Bundesbank, the German central bank, warned that Germany's economy is going through "a phase of weakness" and indicated that "economic output is expected to stagnate more or except in the third trimester. On the other hand, the Purchasing Managers' Index (PMI) has registered significant declines in July and August, which suggests, according to the Afp agency, that a new drop in German GDP is coming during the summer quarter.
Thus, despite having left behind the technical recession –that is, two consecutive quarters of falling GDP-, the German economy could also end the year in the red, trailing behind the euro area countries. The main German economic institutes forecast an estimated drop in GDP of between 0.2 and 0.4% for the year 2023 as a whole.