Germany's economy shrank by 0.1 per cent in the second quarter, final data confirmed, driven by weak private consumption and a drop in industrial investment.
"After a slight increase in the previous quarter, the German economy slowed again in the spring," said Ruth Brandt, head of the federal statistics agency Destatis.
The contraction every quarter confirmed the initial estimate published by Destatis in late July, which surprised analysts who had expected a slight pick-up in growth in Europe's largest economy.
For the period from April to June, there was a 4.1% drop in investment in machinery and equipment and a 2% drop in investment in construction.
Household consumption fell 0.2% from the previous quarter, as did exports amid weak foreign trade.
Germany, traditionally a driver of European growth, was the only major advanced economy to contract in 2023 as it struggled with high inflation, industrial slowdown and cooling export demand.
The recovery was originally expected to begin in early 2024, but a string of disappointing data in recent months has suggested the recovery will take longer than first thought.
"The German economy is currently back to where it was a year ago: mired in stagnation as a growth laggard across the eurozone," said ING Bank economist Karsten Brzeski.
The bleak outlook was highlighted in the closely watched Ifo survey, which showed a further deterioration in business confidence in August - particularly among companies in the manufacturing sector.
While no immediate improvement is in sight, Brzeski said there was "some optimism for the second half of the year" as steady wage growth could still encourage German consumers to spend more in the coming months.
The German government expects the country's economy to grow by a modest 0.3% this year, lagging behind the wider eurozone, which the European Union forecasts will grow by 0.8%. | BGNES
