Germany exits winter recession but output stagnates at best
Chemicals Said Expects It Giant Recovery Has Basf Tentative A
Germany exited its winter recession in the second quarter but output only stagnated, with questions about the fundamental health of Europe’s largest economy remaining.
Gross domestic product was unchanged from the previous three months, falling short of the 0.1% growth estimated by economists. Revised figures for the prior quarters revealed the slump was shallower than initially thought, however.
Between April and June, private consumption helped to stabilise the economy, the statistics office said. It will publish a more detailed breakdown in late August.
While the latest reading offers only meager signs of resilience in Germany, numbers earlier from France and Spain painted a more optimistic picture — easing concerns that the eurozone may be headed for its own downturn.
Germany has already suffered a year-long slump in manufacturing and its outlook for the coming months is bleak. Survey indicators signal rapidly weakening demand — including in the services sector that’s so far held up.
Chemicals giant BASF has said it expects a tentative recovery in chemical output in the second half, easing a slump in one of the country’s biggest industries. But the company cut its expectations for 2023 earlier this month, blaming subdued global industrial output and slow demand for consumer products.
The Bundesbank said in its latest assessment that Germany’s recovery through year-end could be “somewhat more hesitant” than expected in June due to weak foreign demand and higher financing costs as eurozone interest rates are lifted.
The outlook for France looks more positive. France’s economy grew significantly faster than estimated and inflation eased, providing a positive surprise.
Boosted by a surge in exports, the eurozone's second largest economy rose 0.5% between April and June, having increased by 0.1% in the first three months of the year, the Insee statistics agency said.
Consumer prices, meanwhile, rose 5% from a year ago in July — the lowest since Russia’s invasion of Ukraine triggered an energy crisis in Europe. The result is just below analyst expectations, though services inflation inched higher.
Spain’s economy, too, showed signs of resilience with growth of 0.4% that was in line with analyst estimates. While inflation unexpectedly quickened, at 2.1% it’s among the lowest levels in Europe.
Gonzalo Gortazar, chief executive officer of CaixaBank, Spain’s largest lender, said he’s “cautiously optimistic” about the state of the eurozone economy, which reports second-quarter numbers next week.
“We are seeing stronger growth and at this stage inflation is also coming down,” Mr Gortazar said. The latest figures offer some cheer after European Central Bank president Christine Lagarde painted a worsening picture for the euro region over the coming months, with private sector activity for July already pointing to a contraction.