Germany’s economy shrank by 0.1 per cent in the second quarter of 2024 from the previous three-month period, the statistics office said on Tuesday, confirming preliminary data.
Statistics office president Ruth Brand said in a statement:
“After the slight increase in the previous quarter, the German economy cooled down again in spring.”
Germany’s gross domestic product rose 0.2 per cent in the first quarter of 2024 from the previous quarter. The office revised the price- and calendar-adjusted annualised second-quarter change to 0.0%, up from the previous reading of -0.1%.
Hopes for sustained economic recovery are dwindling
Meanwhile, German consumer sentiment will fall in September as rising unemployment, job cuts and insolvencies lower income expectations, dashing hopes for a sustained economic recovery, a survey showed on Tuesday.
The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Solutions (NIM), fell to -22.0 points in September from a slightly revised -18.6 a month earlier and below the forecast of -18.2.
Lower income expectations led to a drop in overall sentiment to 3.5 points from 19.7, as the increase in purchasing power felt by many households proved insufficient to offset growing uncertainty in the labour market.
The recovery seen in August was just a blip triggered by the European Championships, said NIM consumer markets analyst Rolf Buerkl. Pushing back hopes for a sustainable economic recovery driven by private consumption, Buerkl said:
“Slightly rising unemployment figures, an increase in company insolvencies and staff reduction plans at various companies in Germany are causing a number of employees to worry about their jobs.”
Unemployment rose more than usual at the start of the summer holidays, with economic institutions predicting a rise in company insolvencies. In addition, job cuts have recently been announced at companies such as Deutsche Bahn, Bayer and ZF Friedrichshafen.
