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German economy

August 13, 2009

The German economy rebounded unexpectedly in the second quarter. France is reporting a similar recovery. News of an end to recession in two of Europe’s largest economies has surprised many analysts.

A thumbs up sign by a hand painted in the colors of the German flag, as it pushes through a newspaper sheet
The statistics office says private and public consumption, construction and net trade helped lead the nation out of recessionImage: dpa/PA

German gross domestic product (GDP) rose unexpectedly by 0.3 percent in the second quarter, technically bringing an end to the country's deepest recession since World War Two and boosting hopes of recovery in the broader eurozone.

The Federal Statistics Office said on Thursday the preliminary quarter-on-quarter rise was led by a rise in private and public consumption, construction activity and net trade.

However, year-on-year, the German economy shrank by 7.1 percent in the second quarter, the data showed.

Europe's largest economy had been in its sharpest recession since the war, with GDP declining for four consecutive quarters. However, a record GDP contraction in the first quarter of 2009 was revised up to a fall of 3.5 percent from 3.8 percent previously.

Some economists had forecast a 0.3 percent contraction in GDP for the second quarter.

However, the German economics ministry had said prior to the publication of the latest GDP figures that the economy probably stabilized in the second quarter.

Adjusted for working days, Germany's GDP contracted by 5.9 percent on the year in the second quarter. In the first quarter, it had shrunk by 6.7 percent.

The Federal Statistics Office is due to publish a detailed breakdown of the second quarter GDP data on August 25.

The German government expects the economy to contract by some six percent this year.

French GDP also posted a surprise return to growth in the second quarter, rising by 0.3 percent. The French Economy Minister Christine Lagarde announced the recovery.


Editor: Chuck Penfold