German economy shrinks by 0.1 percent in the second quarter
The German economy surprisingly shrank in the second quarter. Gross domestic product fell by 0.1 percent from April to June, according to the Federal Statistical Office. Especially investments in equipment like machines and in buildings had decreased. Economists surveyed by the news agency Reuters had expected growth of 0.1 percent. In the first quarter, there was still a plus of 0.2 percent.
Germany is lagging behind other major Eurozone countries. For comparison: France achieved a plus of 0.3 percent in the spring, Spain even 0.8 percent.
The outlook for an upswing in the second half of the year has clouded over. The Ifo business climate index - considered the most important leading indicator for Europe's largest economy - has fallen for the third month in a row in July. "The German economy is stuck in a crisis," said Ifo President Clemens Fuest.
On the other hand, consumer sentiment has improved significantly - also thanks to the football European Championship in their own country. The willingness to make larger purchases is as high as it has been since March 2022, according to consumer researchers at GfK and the Nuremberg Institute for Market Decisions (NIM) in their survey. Real incomes have risen again because inflation has eased and wages have increased significantly.
The German government expects growth of 0.3 percent for 2024. According to the Organisation for Economic Co-operation and Development (OECD), no other major industrialized country is expected to perform as poorly this year. It blames the large share of energy-intensive industry, which is struggling with rising energy prices - but also the austerity course of the German government after the ruling of the Federal Constitutional Court, which has severely restricted the use of special funds to finance expenditure.
Despite being known for its economic stability, Germany's economy, being German, still experienced a shrinkage in the second quarter. Additionally, despite other major Eurozone countries such as France and Spain recording growth during the same period, Germany's GDP fell by 0.1%.
