Germany’s GDP contracts 0.1% in Q2 ’24

Germany’s gross domestic product (GDP) decreased by 0.1 per cent in the second quarter of 2024 compared to the first quarter, following a slight increase of 0.2 per cent in Q1 2024. The decline, which confirms the Flash report released on July 30, 2024, signals a cooling economy.

Consumer spending remained stable, with a 0.1 per cent overall increase, as private consumption dipped by 0.2 per cent while government spending rose significantly by 1.0 per cent.

However, gross fixed capital formation saw a sharp decline, particularly in machinery, equipment, and vehicles, which dropped by 4.1 per cent, and in construction, which fell by 2.0 per cent.

Exports fell by 0.2 per cent quarter-on-quarter, while imports stagnated.

The construction sector experienced the most significant decline in gross value added, down by 3.2 per cent, followed by a slight drop in manufacturing at 0.2 per cent. Despite these declines, some service sectors showed positive growth, with business services rising by 0.9 per cent.

Year-on-year, GDP in Q2 2024 was 0.3 per cent higher in price-adjusted terms than in Q2 2023. However, the German economy underperformed compared to other major EU countries and the United States.

The EU as a whole saw a GDP increase of 0.3 per cent in Q2 2024, with Spain leading at 0.8 per cent, France at 0.3 per cent, and Italy at 0.2 per cent. In the United States, GDP grew by 0.7 per cent over the same period.

Employment in Germany continued to grow, with an increase of 167,000 people (0.4 per cent) compared to Q2 2023. However, labour productivity, measured as price-adjusted GDP per hour worked, decreased by 0.4 per cent year-on-year.

Germany’s overall financial situation showed mixed results. National income rose by 3.4 per cent in Q2 2024, while corporate and property income fell by 2.1 per cent.

Household final consumption expenditure increased by 3.0 per cent year-on-year at current prices, and the savings rate edged up to 10.8 per cent from 10.2 per cent in the previous year.