German Economy Posts Modest Q2 Growth, Exceeding Forecasts Amid Geopolitical Headwinds

• German Q2 GDP grew 0.2%, beating 0.1% forecast.
• Economy avoided contraction for four consecutive quarters, first time since pandemic.
• Bundesbank expects continued modest growth into Q3.

The German economy registered a 0.2% quarter-on-quarter expansion in the second quarter, outperforming the 0.1% forecast. This follows an upward revision of first-quarter growth to 0.4%. This marks the first time since the pandemic lockdowns that the economy has avoided contraction for four consecutive quarters, although the average quarterly growth during this period has been a modest 0.1%. The Bundesbank projects this modest growth trajectory to persist into the third quarter, despite ongoing geopolitical concerns and elevated energy prices. Preliminary data indicates that a rise in exports was a primary contributor to the Q2 performance, while consumer spending remained subdued and investment saw a decline.