German Economy Shrinks 0.1% in Q2 2024

Germany's economy contracted by 0.1% in the second quarter of 2024 compared to the previous quarter, according to the country's statistics office. This downturn follows a slight increase in the first quarter of the year. The office also revised its year-on-year change for Q2 to 0.0%, up from a previously reported -0.1%.

The contraction was largely attributed to a decline in investment and consumer spending. Capital investment dropped by 2.2%, while private consumption decreased by 0.3%. However, government expenditure increased by 1%. Despite these setbacks, the Bundesbank forecasts economic expansion in the third quarter, driven by rising incomes and stronger spending. Recent indicators have shown a cooling trend in the manufacturing sector, influenced by subdued foreign demand, high borrowing costs, and increased political uncertainty.