Germany’s growth ground to a halt in the second quarter of the year as the energy crisis bit.
Output in Europe’s largest economy was flat between April and June, after growing 0.8 per cent in the first quarter, intensifying fears of a recession in a country dubbed ‘the sick man of Europe’ by economists, as it is battered by reliance on Russian gas and Covid-related issues in its manufacturing sector.
But the wider eurozone economy surprised, recording growth of 0.7 per cent against predictions of 0.2 per cent, according to Eurostat.
On the brink: Output in Germany was flat between April and June, intensifying fears of a recession in a country dubbed ‘the sick man of Europe’ by economists
Spain, Italy and France performed particularly well, notching up second-quarter growth of 1.1 per cent, 1 per cent and 0.5 per cent respectively.
Bert Colijn, an economist at ING bank, said much of this was due to a rebound in tourism and the hospitality industry reopening. This was masking ‘underlying weakness due to high inflation and manufacturing problems’.
Colijn added: ‘From here on, we expect GDP to continue a downward trend as the services reopening rebound moderates, global demand softens and purchasing power squeezes persist. We expect that to result in a mild recession starting in the second half of the year.’
The data came a day after it was revealed the US economy shrank in the second quarter, marking the start of a technical recession.
Inflation hit a record 8.9 per cent in the eurozone in July, piling pressure on the European Central Bank to push ahead with aggressive interest rate hikes.
This month it lifted its base rate for the first time in 11 years.
