German economy on track for stronger growth in third quarter – ministry

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BERLIN, Aug 20 (Reuters) – Germany’s economy is on track for a sustained and likely stronger recovery in the third quarter, driven by buoyant domestic demand after gross domestic product rose 1.5% on the April-June quarter, the finance ministry said. Friday.

A third wave of coronavirus infections and a longer-than-expected lockdown caused the economy, Europe’s largest, to shrink 2.1% in the first three months of the year from the quarter previous.

The Department of Finance said in its monthly report that confidence surveys and forward-looking indicators such as road toll mileage indicated “uninterrupted optimism” among businesses and high economic activity over the summer months.

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The reopening of the economy and the drop in COVID-19 cases at the start of the summer pushed up household spending, which translated into a boom in retail sales in May and June, it said. -he declares.

The economic recovery has also boosted tax revenue, although cumulative tax revenue from January to July is still 1.7 percent lower than the same period in the pre-pandemic year of 2019, the ministry said. This shows how the pandemic has gouged a big hole in German public finances.

Finance Minister Olaf Scholz got the green light from parliament to suspend debt limits in the constitution to allow record new borrowing of up to 240 billion euros this year and more than 130 billion euros l last year.

Scholz, the centre-left Social Democratic candidate to succeed conservative Angela Merkel as chancellor in the September election, has proposed suspending the debt brake for a third consecutive year in 2022 to allow additional borrowing of nearly 100 billion euros next year.

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Reporting by Michael Nienaber Editing by Madeline Chambers

Our standards: The Thomson Reuters Trust Principles.

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