German economy plunges into crisis, expert says

ISTANBUL

The German economy is stuck in a crisis and no recovery is expected in the third quarter of 2024, Klaus Wohlrabe, head of surveys at Munich-based research institute Ifo, said on Tuesday.

Wohlrabe's comments came following Germany's second quarter GDP data, which showed the economy contracted by 0.1% compared to the previous quarter.

In particular, the recovery in the industrial sector is still taking a long time, while energy-intensive sectors have been able to slightly increase their output since the beginning of the year, Wohlrabe stated.

“Overall, business prospects for the coming months blurred considerably in the sector, which has been unable to receive new orders as backlogs have declined.

“The recovery in private consumption also slowed, with a likely temporary pick-up in hospitality sales and a surprisingly positive trend in auto sales,” he pointed.

On balance, private consumption is likely to rise only marginally in the third quarter as the business environment for consumer-related service providers and the retail sector deteriorated further in July as conclusion.

On an annual basis, the economy contracted by 0.1%, following a 0.1% decline in the previous period, and no growth was recorded in the fifth straight quarter.