Germany's economy continued its recent recovery in the second quarter despite the impact of the Iran war. According to preliminary figures from the Federal Statistical Office, gross domestic product (GDP) rose by 0.2 percent between April and June compared with the previous quarter. Economic researchers and business associations described this as a positive signal, though they pointed to continuing obstacles to future growth.
As the Federal Statistical Office explained on Thursday in Wiesbaden, German exports in particular rose in the second quarter. Consumer spending, by contrast, developed "cautiously," while investment declined. The statisticians also revised first-quarter economic output slightly upward, instead of 0.3 percent, the German economy grew by 0.4 percent between January and March.
The German economy showed itself to be "surprisingly robust" in the second quarter in the face of higher energy prices and high inflation, commented Munich's Ifo Institute on the latest developments. "In particular, the crisis-hit manufacturing sector is likely to have further expanded its value creation," explained Ifo's head of economic forecasting, Timo Wollmershäuser.
"The fact that the German economy grew slightly in the second quarter despite the Iran war and temporarily sharply higher energy prices shows that the economy is currently proving resilient," said Christian Breuer, economic expert at the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation. "Given the considerable external economic burdens, this is a positive signal."
Economic expert Philipp Scheuermeyer of the KfW development bank said the German economy had "come through the energy price shock encouragingly well." Nevertheless, "the cow is not yet off the ice", since the Strait of Hormuz, which is important for maritime trade, remains blocked and "a stable ceasefire is not yet in sight." He also warned that "the ongoing drought could still somewhat limit industrial production this summer through supply bottlenecks."
The German Chambers of Industry and Commerce (DIHK) likewise described the second-quarter growth as an "encouraging signal," but stressed it was "by no means a breakthrough," according to DIHK foreign trade chief Volker Treier. "Only thanks to massive public investment, largely financed by credit, has the German economy coped better than feared with the Iran shock so far."
The external economic environment remains difficult for companies, the DIHK's foreign trade chief noted, listing supply bottlenecks, US tariffs and "high, in part unfair competitive pressure from China" as ongoing burdens for businesses.
"On top of that come the structural problems at home, such as the still-high energy and labor costs, high tax burdens and excessive bureaucracy." While the federal government has announced various measures to improve economic conditions, Treier demanded that "it must now also implement the first reform steps quickly and consistently."
Other major economies in the European Union also released their latest GDP figures. In France, the EU's second-largest economy after Germany, growth of 0.2 percent was recorded in the second quarter according to the statistics institute Insee, after economic output had shrunk slightly by 0.1 percent at the start of the year.
In Spain, GDP rose by 0.7 percent in the second quarter, according to the statistics office INE. Across the eurozone as a whole, economic output grew by 0.4 percent, according to Eurostat.
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