The German economy slowed in the second quarter, according to statistics released on Friday, with the Ukraine conflict, the flu, and supply disruptions pushing Europe’s biggest economy into recession.

According to the federal statistics agency, GDP remained constant in adjusted terms from quarter to quarter. A Reuters survey of analysts predicted 0.1 percent growth.

However, the economy performed better than expected in the first quarter, with the office raising growth to 0.8 percent from 0.2 percent.

According to the agency, household and government spending helped strengthen the economy from April to June, but the trade balance held it back.

“The difficult framework conditions in the global economy, including the COVID-19 pandemic, interruptions in supply chains and the war in Ukraine, are clearly reflected in the short-term economic development,” the organization stated in a statement.

Analysts stated that the current state of the economy is so bleak that stasis almost seems like good news, and that with no signs of a recovery in sight and worry over energy supplies this winter, the atmosphere were ideal for a recession.

“As of today, it would already be a success if economic output in the second half of the year continued to stagnate,” said Alexander Krueger of the private bank Hauck Aufhaeuser Lampe.

With the drop in the Ifo business environment index, which touched a two-year low this month, and the Purchasing Managers’ Index, which witnessed flash readings below the growth level, Fritzi Koehler-Geib of the state-owned KfW development bank said that “a recession is in the air”

“In the end, how the economy actually developed depends on (Russian President Vladimir) Putin’s gas deliveries,” said Commerzbank’s Joerg Kraemer.

According to the country’s network regulator, Germany is facing the question of how to heat homes and power industry come winter because gas flows via the Nord Stream 1 pipeline connecting it to Russia have fallen to 20% of capacity, making it nearly impossible to meet storage goals without additional measures.

Source: Reuters


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