The war in Ukraine, delivery bottlenecks and rising inflation are burdening the German economy. The Federal Statistical Office therefore expects the economy to stagnate. But the figures for the first half of the year surprise the experts. The gross domestic product has grown slightly.
The German economy surprisingly grew in the spring. Between April and June, gross domestic product rose by 0.1 percent compared to the previous quarter, as reported by the Federal Statistical Office, thereby revising a flash estimate. Initially there was talk of stagnation in economic output. The consequences of the war in Ukraine, persistent supply bottlenecks and high inflation are weighing on the economy.
The cash position of the German state also improved significantly in the first half of 2022. Based on preliminary calculations, the Federal Office announced that the federal, state, municipal and social security deficits were 0.7 percent of total economic output. A year earlier, a drop of 4.3 percent was recorded, mainly because of the billions in corona aid.
“Despite the difficult global economic conditions, the German economy held its ground in the first two quarters of 2022,” said Georg Thiel, President of the Federal Statistical Office. In the first quarter of 2022, the German economy grew by 0.8 percent. According to economists, the German economy faces tough months due to the gas crisis.
According to the Ifo Institute, private consumption as an economic driver will fail as the year progresses due to rising consumer prices. The Deutsche Bundesbank now considers a decline in economic output in the winter half-year to be “significantly more likely”. “The high level of uncertainty about the gas supply in the coming winter and the sharp price increases are likely to put a significant strain on private households and companies,” said the central bank’s most recent monthly report. The bank assumes that the inflation rate in Germany could reach “an order of magnitude of ten percent” in the fall.
