German GDP growth stagnates year-on-year in Q2, foreign trade weighs in on economic activity

The German real GDP growth was down 0.1 percent in the second quarter from the first quarter. As the Federal Statistical Office (Destatis) reported in its initial release in mid-August, Germany saw a slight fall in economic performance.

Foreign trade slowed down growth, consumption expenditure, while capital formation underpinned economic activity. The development of foreign trade slowed down economic growth in the June quarter. After seasonal and calendar adjustment, price-adjusted exports dropped 1.3 percent from the preceding quarter, markedly more than imports.

The quarter-on-quarter comparison indicates that positive contributions came from domestic demand, showed provisional calculations. Household final consumption expenditure rose 0.1 percent from the first quarter of 2019 and government final consumption expenditure rose 0.5 percent. Capital formation rose too. Fixed capital formation in machinery and equipment rose 0.6percent and in other fixed assets by 1 percent on the prior quarter. Gross fixed capital formation in construction dropped in the second quarter by 1 percent.

Real GDP growth stagnated on a year-on-year basis. After calendar adjustment, GDP grew 0.4 percent. In the first quarter, real GDP was 0.8 percent higher than in the same quarter of the preceding year.

Household final consumption expenditure rose 1.5 percent year-on-year and government final consumption expenditure rose 1.9 percent. Nevertheless, investment growth decelerated. Price-adjusted gross fixed capital formation in machinery and equipment rose just 1.5 percent. Gross fixed capital formation in construction rose 2.2 percent. A year-on-year rise was seen especially in housing construction. On the whole, domestic uses rose 1.3 percent.

On a year-on-year basis, foreign trade slowed down economic growth. Provisional calculations showed that price-adjusted exports dropped 0.8 percent, the largest fall seen in the past six years. On the contrary, imports of goods and services rose 1.8 percent year-on-year.