The German economy grew in the second quarter, propped up by household and government spending and beating analyst expectations that saw it on the edge of a downturn, data showed today.
Europe’s largest economy grew by 0.1% quarter on quarter and 1.7% on the year, adjusted for price and calendar effects, the federal statistics office said.
Analysts polled by Reuters had expected the economy to stagnate quarter on quarter in the three months to June, in line with the statistics office’s earlier flash estimate.
Household expenditures were up by 0.8% compared with the first quarter, despite high inflation rates and an energy crisis, said the office. Government consumption grew by 2.3%.
Analysts said the concerns about the economy remained acute.
“The negative factors are currently so great that even a sharper downturn cannot be ruled out,” VP Bank chief economist Thomas Gitzel said.
“Or to put another way: A lot of positive things would have to happen for a recession not to materialise,” he added.
The S&P Global flash composite Purchasing Managers’ Index (PMI) showed similar sentiment, with the reading indicating contraction for the second month in a row.
Meanwhile, the Ifo economic institute expects the German economy, Europe’s largest, to shrink by about half a percentage point in the third quarter and a recession is still on the cards, Ifo economist Klaus Wohlrabe told Reuters today.
Sentiment in the foreign trade sector is really poor, burdened by high inflation, Wohlrabe said, adding that the good news from the institute’s August survey was that supply chain bottlenecks in industry had eased significantly.