Germany’s economy expanded modestly in the second quarter, upgrading from an earlier estimate of stagnation, revised official data showed on Thursday, banishing the specter of a recession.
According to the Federal Statistical Office, which had previously assumed zero growth, production grew by 0.1 percent in the period from April to June.
The economy was supported by both private and public domestic demand, and government spending rose by 2.3 percent.
Personal spending rose 0.8 percent qoq as the end of Covid-19 restrictions brought more tourism and hospitality.
Europe’s largest economy has slowed while inflation is soaring, and Russia’s invasion of Ukraine has pushed up energy and food prices.
Germany has relied heavily on supplies of Russian gas to meet its energy needs, but Moscow has slowly reduced supplies since the beginning of the war.
The threat that Russia could cut supplies altogether has increased the possibility of shortages over the winter and brought Germany closer to rationing supplies, with punitive implications for business.
Even if the latest data gave Germany a respite from negative growth, the economic indicators of the last few days paint a pessimistic picture.
The Ifo monthly confidence barometer, which is based on a survey of 9,000 companies, fell to 88.5 points in August for the third month in a row.
“Companies were a little less satisfied with their current business, and the highly pessimistic outlook for the coming months is almost unchanged,” says the institute.
“Business uncertainty remains high and the German economy as a whole is expected to contract in the third quarter,” she added.
In a recent interview, Bundesbank President Joachim Nagel warned that although the German economy held up well in the second quarter, new problems in the supply chain would “further cloud the prospects for the second half of the year”.
In particular, if the energy crisis worsens, “a recession is likely for the coming winter”.
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