The German GDP advanced one tenth (0.1%) in the second quarter of the year compared to the previous three months, according to the definitive revision of the growth data made this Thursday by the German statistical office Destatis. In the first reading, a stagnation (0.0%) was reflected, which in the end has not been such, improving analysts’ forecasts and showing more resilience than expected. This tenth allows a return to pre-pandemic GDP levels, those of the last quarter of 2019, something that the EU as a whole, France or Italy, but not Spain, have already achieved.
The growth data has boosted the euro, which recovered ground against the dollar and rose above parity, after hitting a 20-year low this week. The exchange rate of the euro against the greenback has reached 1.0018 dollars from 0.9965 yesterday’s close.
In any case, the data does not improve the gray prospects for the remainder of the year in a Germany punished for its dependence on Russian gas, now looking for alternatives against the clock, and drought. Business confidence has slightly worsened this August, from 88.7 points to 88.5, according to data from the IFO economic institute today. The outlook for the coming months is “clearly pessimistic,” said the institution’s president, Clemens Fuest. “Uncertainty among companies remains high. The economy is likely to shrink in the third quarter.” The contraction would be around 0.5%, according to IFO economists quoted by Reuters.
In the second quarter, the economy “relied mainly on household and public consumption spending,” it is noted. Thus, consumer spending was 0.8% higher than in the first quarter, while that of the State increased by 2.3%. “Despite the sharp rise in prices and the energy crisis,” citizens took advantage of the lifting of almost all restrictions related to the pandemic to travel again and go out more, he points out in a Destatis commentary. This is also reflected in the savings rate, which went from 16.5% to 10.1%, in an environment of higher expenses due to the inflationary crisis.
As for public spending, investments in capital goods -especially in machinery, devices and vehicles- also increased compared to the previous quarter -1.1%-, while in construction they fell by 3.4%.
Among companies, activity varied by sector. Manufacturing fell five tenths due to high energy costs and construction fell 2.4 points, while services grew two points due to the drop in pandemic restrictions.
Foreign trade, for its part, increased as a whole (exports increased by 1.9%), despite the fact that significantly fewer goods were exported to Russia in the second quarter than at the beginning of the year due to the war in Ukraine.
