The German economy rebounds in the 2nd quarter but below forecasts


BERLIN (AP) — Germany’s economy grew 1.5% in the second quarter from the previous three-month period, rebounding from a sharp decline in the first quarter but less sharply than expected.

The figure released Friday by the Federal Statistical Office did not reach the 2% gain predicted by economists. Additionally, the first-quarter decline was steeper than previously reported — a 2.1% decline in gross domestic product, rather than the 1.8% reported in May.

Second-quarter GDP was 9.2% higher than a year earlier, both in terms of price and timing. The second quarter of last year saw the initial strong impact of the coronavirus pandemic on Germany’s economy, Europe’s largest.

The period from April to June this year saw infections resurging and then declining to a very low level, prompting authorities to ease many restrictions, while the country’s vaccination campaign accelerated.

Despite the recovery, which has been attributed to higher household and government spending, the economy has yet to regain its pre-pandemic size. The statistics office said GDP was still 3.4% lower in the second quarter than it was in the last quarter of 2019, the last before the pandemic began.

Carsten Brzeski, an economist at ING, said the discrepancy between upbeat confidence indicators and hard data was due to “the long list of supply chain frictions”, including the disruption caused by a ship blocking the Suez Canal and delays in production and delivery. microchips and semiconductors.

Any new restrictions brought about by the more contagious delta variant of the coronavirus “could easily derail a further acceleration of the economy”, but significant new restrictions that could undermine economic activity are not likely with a national election scheduled for September 26. , he added. Ongoing supply chain issues and rising inflation could also hurt growth and spending.

Despite these risks, “we expect the German economy to return to pre-crisis levels before the end of the year,” Brzeski said.

The Federation of German Industries, the main lobby group for German industry, has also warned of potential pitfalls ahead.

“The fourth global corona wave and the continuing difficulties in the delivery of primary products threaten to endanger the still intact German and European economic recovery in the second half of the year,” group chief executive Joachim Lang said in a statement.

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