German economy defies Middle East war by growing in the second quarter
At a Glance
Germany's Q2 GDP grew 0.2% QoQ, defying Middle East war fears and soaring energy prices, driven by exports. ING notes this is the first time since pandemic lockdowns that the economy has avoided shrinking for four consecutive quarters, though the economy remains smaller than in late 2022. The outlook hinges on energy prices and conflict expansion, with low water levels adding supply-chain risk.
Key Takeaways
- 01German Q2 GDP grew 0.2% QoQ, beating expectations despite Middle East war and energy shocks.
- 02Export strength drove growth while investment contracted.
- 03The economy is still smaller than in late 2022, with average quarterly growth of just 0.1%.
- 04Near-term outlook depends on energy prices, conflict expansion, and low water levels impacting supply chains.
Full Analysis
What the desk is arguing
The German economy grew 0.2% QoQ in Q2, defying fears related to the Middle East war and soaring energy prices, per the full note [ing-think]. This follows an upwardly revised 0.4% in Q1, marking the first time since pandemic lockdowns that the economy has avoided shrinking for four consecutive quarters.
ING highlights that average quarterly growth over this period is just 0.1%, and the economy's size remains smaller than in late 2022. Growth was mainly export-driven, while investments dropped. The desk implicitly rejects the narrative that the German economy is in a deep slump, emphasizing resilience despite the depressed mood.
Market Implications
The resilience in German GDP may support EUR/USD in the near term, but the fragile outlook caps upside. Watch for further data on industrial production and export orders for confirmation.
From the original
Newer quick take Older quick take Quick take Published 09:10 Germany German economy defies Middle East war by growing in the second quarter It's almost too good to be true: the German economy defied the fallout from the war in the Middle East and grew by 0.2% quarter-on-quarter i
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4 itemsGerman economy defies Middle East war in first quarter
The German economy has shown surprising resilience in the first quarter, largely defying external shocks including the ongoing conflict in the Middle East. Per the full note from ING Economics, this resilience is underscored by a GDP growth rate of 0.2%, signifying an ability to maintain momentum despite geopolitical tensions and inflationary pressures. As markets consider these developments, the outlook for the euro remains cautiously optimistic, though uncertainties loom depending on international events and domestic policy responses.