Germany: third quarter without any sign of economic growth

This makes it the third quarter without growth for Germany, and we are likely to have a fourth quarter as well.

The German economy remained stagnant in the second quarter of 2023 compared to the previous three months, after two consecutive periods of contraction. GDP had zero growth.

Household consumption stabilized after declining in the previous winter half-year, and government spending increased by 0.1 percent, marking the end of a year-long recessionary period.

However, growth in gross fixed capital formation slowed sharply to 0.4 percent from 1.7 percent in the first quarter, due to cooling investment in both construction (0.2 percent vs. 2.7 percent) and machinery and equipment (0.6 percent vs. 2.1 percent).

Changes in inventories contributed 0.4 percentage points to GDP growth, while external demand subtracted 0.6 percentage points due to a decline in exports. On an annual basis, Europe’s largest economy contracted 0.2 percent in the second quarter. Here is the related chart

A Germany that is stockpiling, but no longer investing, especially in real estate should give German rulers pause for thought. This is also caused by rising interest rates. These depress demand for construction work and capital goods and slow down lending. According to the Deutsche Bundesbank, demand for home construction loans from private households in the second quarter was significantly lower than a year earlier.

The Bundesbank assumes that even in the current summer quarter the economy is expected to stagnate. Many experts even predict a decline in GDP for the whole of 2023. Data from the Purchasing Managers’ Index have recently heightened fears that the stagnant situation in industry may extend further to service providers.

No rapid improvement in sight

The German PMI in virtually every sector is negative, indeed we might say tragic if we are talking about manufacturing. This comes to indicate that there is no possibility of a turnaround any time soon. German analysts are confirming this view, with economic research institutes sounding warnings about an economy too tightly bound by anti-growth policies. The “Growing with Zero climatic impact” or the “Expansive Austerity” of the German school and the Green Party is now clearly a myth, like unicorns and exists only in the minds of children, deluded people or colo. who make their income from these illusions.