German economy stagnates in second quarter

The German economy stagnated in the three months to June, according to figures released by Destatis on Friday.

Gross domestic product was unchanged in the second quarter, coming in below expectations of 0.1% growth.

Data for the first quarter was revised up to show a 0.1% contraction, from a 0.3% contraction.

Franziska Palmas, senior Europe economist at Capital Economics, said: "No breakdown has been published at this stage but the press release noted that, after contracting in previous quarters, household consumption stabilised. That is an improvement but the big picture remains that the German economy has shrunk in the past nine months. Germany also remained the worst-performing major euro-zone economy in Q2 as output rose strongly in France (+0.5%) and Spain (+0.4%).

"Overall, the Q2 GDP data released so far (which also include a 0.4% q/q fall in GDP in Austria) suggest that euro-zone GDP expanded by 0.2% q/q in Q2. This is better than we had expected given the extent of the monetary tightening over the past year. However, we still think that high interest rates will take an increasingly weigh on economic activity in the rest of the year."