Economic Snapshot: Germany: Emerging from the woods

The German economy managed to turn the corner in the second quarter of 2009. Following the severest economic collapse in the history of the Federal Republic, which saw gross domestic product shrink by 6.7% from the first quarter of 2008 to the first quarter of 2009, in the second three months of this year the economy returned to slight expansion.

In the second quarter private consumption, government spending, construction investment and, above all, net exports contributed to this growth. There was another marginal dip in machinery and equipment investment.

However, what severely depressed economic performance was destocking, which made a negative contribution to growth of –1.9%. Had stocks not been run down so massively, the economy would have bounced back by a remarkable 2.2% versus the first quarter.

 

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