The German economy is in crisis and there is a risk of falling back into recession. Detailed data from the Federal Statistical Office will show how the economy developed in the second quarter.
Weakening industry, crisis in the construction industry, consumer reluctance to buy due to inflation: the German economy is not emerging from the crisis and is teetering on the brink of recession. The Federal Statistical Office will present details of how gross domestic product developed in the second quarter this Tuesday (8 a.m.). The agency will also publish data on public finances in the first half of the year. Borrowing and compliance with the debt brake have been a major point of contention in the federal government for months.
In an initial estimate at the end of July, the Federal Statistical Office found that economic output in the second quarter had contracted by 0.1 percent compared to the previous quarter. This came as a surprise to economists, who had expected at least a slight recovery after a mini-growth of 0.2 percent in the first quarter.
This means that Germany is at risk of falling back into recession. If the gross domestic product (GDP) shrinks in two consecutive quarters, economists speak of a “technical recession”. Economic output had already fallen slightly in 2023.
Recently, the mood in the German economy has continued to deteriorate. The business climate index calculated by the Ifo Institute fell by 0.4 points to 86.6 points in August. This was the third consecutive decline in the most important German economic barometer.
The German Bundesbank is also cautious about the German economy. The expected slow economic recovery will be further delayed, it said in its latest monthly report. The central bank expects the economy to continue to slow down in Germany, but not a broad-based and long-lasting decline in economic output.
Source: Stern
