Germany’s economy recovers in Q2
Germany’s economy improved more than anticipated in the second quarter. The development was driven by the lifting of COVID-19 restrictions that encouraged consumers to tap into record savings accumulated during the winter shutdown and the government’s massive debt-financed stimulus program.
Gross domestic product jumped an adjusted 1.6% on the quarter after a revised 2% contraction in the first quarter. The latest figure exceeded the initial estimate of 1.5%.
Germany’s economy grew a calendar-adjusted 9.4% on the year in the second quarter. Economic activity marked 3.3% below the fourth-quarter level in 2019.
Private consumption improved 3.2% in the same period. This accounted for 1.6% points to overall growth and pushed down the savings rate to 16.3%.
Public consumption climbed 1.8%, adding 0.4% to the overall growth rate.
The government’s spending funded by new debts to mitigate the COVID-19’s impact blew a 80.9 billion euro ($95 billion) hole in the public finances in the first half of the year. This reflected a public sector deficit of 4.7% of GDP, the biggest in 26 years.