German Economy - Signs of Recovery

23 August 2002

Europe’s largest economy and advertising market posted better than expected growth in the quarter to June 30, reports Germany’s Federal Statistics Office.

Leading the long march out of recession, consumer spending was the main trigger of growth – 0.3 percent during the quarter.

But despite cheerleader noises from the Finance Ministry (“… the upward trend remains stable … indicators point to an acceleration in economic activity in the second half of the year”), some analysts dubbed the growth “feeble” and worry over the nation’s prospects during this year’s second half.

Says Dresdner Kleinwort Wasserstein economist Rainer Guntermann: “The outlook is clouded by mixed signals: expectations indexes have weakened, and I think growth will be weaker in the third quarter because of the [recent serious] flooding. We won't see any positive effects from reconstruction until the fourth quarter.” The economy, he believes, will grow 0.5% over the year as a whole.

Germany’s economy contracted for two successive quarters during the last six months of 2001 – the official definition of a recession. But according to the FSO, it recovered in the first quarter of 2002, expanding by a hesitant 0.2% [WAMN: 24-May-02].

Data sourced from: BBC Online Business News (UK); additional content by WARC staff