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Published 15:02 IST, July 30th 2024

German economy unexpectedly contracts by 0.1% in second quarter

On a year-on-year basis, the second quarter's GDP also contracted by 0.1%, adjusted for price and calendar effects.

Reported by: Business Desk
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 German Economy Poised for Growth After 2023 Contraction, According to EU Commission
German economy Q2 contraction | Image: Pexels

German economy Q2 contraction: The German economy unexpectedly shrank in the second quarter, highlighting the euro zone's largest economy's struggle to gain momentum despite easing inflation pressures.

Germany's gross domestic product (GDP) contracted by 0.1 per cent in the second quarter compared to the previous three-month period, according to preliminary data from the statistics office released on Tuesday. This contraction came as a surprise, as analysts polled by Reuters had predicted a 0.1 per cent quarter-on-quarter increase in adjusted terms, following 0.2 per cent economic growth in the first quarter.

On a year-on-year basis, the second quarter's GDP also contracted by 0.1 per cent, adjusted for price and calendar effects.

Economists are closely monitoring national inflation data due to be released later on Tuesday, ahead of the euro zone inflation data on Wednesday. Reuters' poll forecasts Germany's harmonised inflation rate at 2.5 per cent in July, unchanged from the previous month.

In regional inflation developments, North Rhine-Westphalia, Germany's most populous state, saw its inflation rate rise to 2.3 per cent in July from 2.2 per cent in June, indicating a potential increase in national inflation. Similarly, inflation rose in Saxony and Baden-Wuerttemberg, while it remained unchanged at 2.6 per cent in Brandenburg and 1.8 per cent in Hesse. Bavaria was the only state to record a decrease in inflation, dropping to 2.5 per cent in July from 2.7 per cent in June.

(With Reuters inputs.)

Updated 15:03 IST, July 30th 2024