Germany – Q2 weaker than expected

The predominantly very weak economic data for June had already given cause for concern: German real GDP fell more sharply in the second quarter than previously reported. After a decline of 0.1% was reported three weeks ago, the Federal Statistical Office now expects a decline of 0.3%. Consumer spending increased, especially government spending, while investment declined significantly. Exports remained virtually unchanged, with a decline in goods exports offset by higher exports of services.

The decline in the second quarter is probably partly a counter-movement to the fairly positive development at the beginning of the year (Q1: +0.3% qoq), with the late timing of Easter and pull-forward effects in view of the impending US tariffs likely to have played a role. Therefore, there should be no talk of a renewed slump at this point. However, today's figures show that there was no sign of a revival in the German economy in the first half of the year. Instead, real GDP has been largely flat since the middle of last year, after falling for almost two years.

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