German Q2 GDP edges higher, beats expectations

The German economy grew a touch in the second quarter of the year, beating expectations of no growth, according to final figures released on Thursday by Destatis.

In the three months to June, GDP ticked up 0.1% following a 0.8% increase in the first quarter. This was better than the initial estimate of zero growth and was supported mostly by government spending.

Dr. Georg Thiel, President of the Federal Statistical Office, said: "Despite difficult framework conditions in the global economy, the German economy held its ground in the first two quarters of 2022."

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Looking ahead, we think German GDP will fall this quarter, and also in the next, such that it will suffer a shallow technical recession by the end of the year.

"Surveys and near-real time data, such as the truck toll index MAUT, suggest industry is about to hit the skids, and this is before any real energy rationing is enforced. We doubt the country will avoid rationing, as Russian gas flows dwindle further; we think flows will hit zero before the end of the year.

"Meanwhile, pent-up demand for services is unwinding, as the squeeze on real incomes bites. The cut to rail fares and VAT will help, but won’t prevent a fall in consumer spending, we think. All told, we continue to expect a 0.5% fall in GDP this quarter, to be followed by a 0.4% decline in Q4, such that the economy will grow by just over 1.5% this year overall."