German economy stagnates after short recession

Berlin, July 29 (IANS) After two quarters of economic contraction, Germany's gross domestic product (GDP) stagnated in the second quarter of 2023, according to preliminary figures published by the Federal Statistical Office (Destatis).

At the same time, the official figures for the previous two quarters were corrected upwards, Xinhua news agency quoted Destatis as saying on Friday.

Instead of shrinking by 0.5 per cent and 0.3 per cent respectively, the German economy contracted by 0.4 per cent in the final quarter of 2022 and 0.1 per cent in the first quarter of this year.

"There are slightly positive trends in private consumption and investment, but this is not enough, and it is anything but satisfactory," Minister for Economic Affairs and Climate Action Robert Habeck said in a statement on Friday.

German consumer prices are normalising more slowly than elsewhere in the eurozone.

After inflation in Europe's largest economy increased again in June, it is expected to slow to 6.2 per cent this month, according to Destatis.

Consumer sentiment meanwhile remains at a low level, the market research institute GfK said earlier this week.

The forward-looking consumer climate index for August rose only slightly to minus 24.4 points.

In the coming months, levels are expected to remain low.

Private consumption would "not be able to make a positive contribution to overall economic development", said GfK expert Rolf Buerkl.

The German government is currently weighing possible solutions to boost the country's economy.

Habeck sees the need for a "targeted stimulus for investment and scope for our energy-intensive industry".

"Germany is facing a mountain of major challenges," Siegfried Russwurm, president of the Federation of German Industries (BDI), had warned last month, stressing that more and more companies were leaving because the costs, speed and bureaucracy "are simply not affordable for them in comparison".