German quarterly GDP is stagnant

There was little comfort for Germany’s Chancellor Gerhard Schroeder’s in the country’s latest GDP figures, which confirmed that the economy stagnated in the second quarter of 2005. That is a further blow to his already slim chance of being returned to office in the elections due in mid September. The Federal Statistics Office said GDP increased by 0.8% in the first three months of the year from the previous quarter and was flat in the second quarter. But the economy grew by 1.5% compared with the same period last year.

The reason for the second quarter GDP stagnation was that a sharp rise in imports cancelled out the effects of further export growth and improving domestic demand. However that increased domestic demand was in the public sector and businesses spending on equipment rather than from private consumers. Retailers saw little benefit as private consumption again fell for the second straight quarter. Consumer spending was down 0.3% compared with a 0.5% drop in the first quarter. At the same time German investor confidence is rising. In early August it was at its highest level in 17 months, according to the latest survey of analysts and institutional investors carried out by the ZEW economic research institute.

Copyright © 2012 euronews