German economy contracts 0.1% in Q2

Germany’s economy unexpectedly shrank by 0.1 per cent in the second quarter, according to preliminary data released by the Federal Statistical Office, Destatis on Tuesday.

This contraction pulls back a 0.2 per cent growth in the first quarter and defies analysts’ forecasts of a 0.1 per cent increase. On a year-on-year basis, GDP also fell by 0.1 per cent, adjusting for price and calendar effects.

The latest data highlights ongoing struggles the eurozone’s largest economy faces despite easing inflation pressures. The German economy has not been recording two consecutive quarters of growth since early 2022. Economists are awaiting national inflation figures later today, with expectations for a harmonised inflation rate of 2.5 per cent in July, unchanged from June.

Regional inflation rates varied, with North Rhine-Westphalia’s rate rising to 2.3 per cent in July from 2.2 per cent in June. Other regions like Saxony and Baden-Wuerttemberg also recorded increases, while Bavaria experienced a slight decline to 2.5 per cent from 2.7 per cent.

Attribution: Reuters & Destatis