Germany's economy exited recession in the second quarter, growing by 0.3 per cent, as net trade and private consumption offset a sharp reduction in firms' inventories, Federal Statistics Office data showed today.
The expansion in gross domestic product (GDP) put an end to four consecutive quarters of economic contraction in Germany's deepest slump since World War Two. Many analysts believe growth should accelerate in the July-September period.
Releasing final GDP data, the Statistics Office said net trade added 1.6 percentage points to GDP as a sharp drop in imports outpaced a decline in exports. Private consumption added 0.4 points and a liquidation in inventories subtracted 1.9 points.
A spokesman for the Office said inventories had only once had a bigger negative impact on GDP, noting that the previous case in the last quarter of 2006 had been a blip caused by statistical factors which did not properly reflect the state of the economy at the time.
Latest indicators, such as the Ifo institute's gauge of business sentiment, have risen, suggesting the recovery is gaining strength. Measures of analyst and investor confidence have also risen steadily in recent months.
Nevertheless, worries about a possible credit crunch persist, and the German Economy Ministry says it has been examining steps it could take to counter this.
Year-on-year, the economy shrank 7.1 per cent in the second quarter, the data showed, following a 6.4 per cent drop in the January-March period, matching preliminary estimates.
Also confirming earlier estimates, adjusted for working days, German GDP contracted by 5.9 per cent on the year in the second quarter. In the first quarter, it shrank by 6.7 per cent.
Reuters