Economic growth in the second quarter of 2018

Author: Osman Cetinkaya
Date: 16.08.2018

Higher consumption expenditures by state and private households

The growth of the German economy continues: In the second quarter of 2018, gross domestic product – price, seasonally and calendar adjusted – was 0.5 percent above the previous quarter. This is what figures from the Federal Statistical Office showed on Tuesday.

GDP growth in the first quarter of 2018 was slightly weaker with 0.4 percent.

In particular the domestic market offered positive aspects: Both the state and private households increased their consumption expenditure. And the number of investments has also risen: Investments in equipment, buildings and others assets were in the second quarter of 2018 higher than in the first. Foreign trade development was characterized by rising exports and an increasing number of imports.

According to estimations of the Bundesbank, the economy should now have accelerated after the bad start. “Macroeconomic performance should have shown more momentum in the spring quarter of 2018 than at the beginning of the year” states the latest monthly report.

A major factor dampening the poor start of the year is the strong wave of influenza, which did not play a role in the second quarter. In addition, after the decline in governmental expenditures in the winter months one can expect a contrary movement.

Due to the good situation on the job market and rising wages, the purchasing power of the population is also increasing. However, one problem could be the international trade conflicts. Customs and trade barriers could affect the German economy.