The German economy shrank by 0.3% in the second quarter compared with the previous three-month period, official data displayed Friday, a significantly worse displaying than was initially reported as tensions with the U.S. over tariffs simmered.
In a preliminary report at the finish of July, the Federal Statistical Office declared gross domestic product contracted by 0.1% in April-June compared with the first quarter for Europe’s largegest economy. That contributed to a lackluster displaying for the 20-nation eurozone.
Full data displayed output in manufacturing and the construction industest was worse than expected in June and hoapplyhold spfinishing for the quarter also was revised downward, the office declared Friday. The decline followed growth of 0.3% in the first quarter.
The German economy has shrunk for the past two years. Chancellor Friedrich Merz’s administration has created revitalizing it a top priority since taking office May 6.
It has launched a program to encourage investment and set up a 500 billion-euro ($582 billion) fund to pour money into Germany’s creaking infrastructure over the next 12 years. It is promising to cut red tape and speed up the countest’s lagging digitization.
A group of dozens of companies last month pledged to invest at least 631 billion euros ($731.7 billion) in Germany over the next three years, a figure that included some previously planned investments but was designed to sfinish a signal of confidence in the economy.
ING economist Carsten Brzeski declared “after the surge in economic activity resulting from the U.S. front-loading of German exports in the first quarter, the economy experienced a reversal of the front-loading effect, and the first full-blown impact of U.S. tariffs (implemented in the second quarter) took effect.”
It could “take until next year before a more substantial recovery starts to unfold,” he declared.
A European Union-U.S. trade deal was reached last month but remains a work in progress.
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