Recession looms, as the German economy stagnates.

 According to official figures released on Friday, German economy slowed down in the second quarter of the year. Analysts warned that a recession may be on the horizon due to the impending energy crisis. According to the federal statistics agency Destatis, the "tough" global economic conditions prevented any growth in the largest economy in Europe. According to Destatis, the ongoing effects of the "Covid-19 epidemic, supply chain disruptions, and the crisis in Ukraine are clearly visible in the short-term economic development." The initial estimate of 0.2 percent growth in the first quarter was revised up to 0.8 percent. 

But according to Jens-Oliver Niklasch, senior economist at the LBBW bank, the disappointing second-quarter numbers demonstrated that Germany's "economic engine is stuttering. Through June, the economy was supported by the government and consumers, but he predicted that household spending would soon "run out of steam" due to the high inflation rate. Consumer prices in Germany increased by 7.5% in July, significantly higher than the ECB's goal rate of 2%, driven by the high cost of energy. Germany is "on the verge of a recession" due to the escalating economic challenges, according to Niklasch. 

According to Carsten Brzeski, economist of ING bank, sharp drops in important economic indices, such consumer confidence, were already in "recession zone." According to him, a decline in the second half already seemed "like a done-deal." Concerns that Germany could need to ration energy during the winter, with a severe effect on business, have also been raised by the potential of a cutoff of Russian gas supplies amid tensions over Ukraine. According to Brzeski, "the war in Ukraine puts an end to the German economic business model" that relied on enormous exports of goods and inexpensive energy imports in a globalized economy. Separate data issued on Friday revealed that for the second consecutive month, the unemployment rate in Germany increased by 0.1 percentage points in July to 5.4 percent. 

According to the BA federal labor office, the recent increase has been ascribed to Ukrainian immigrants joining the ranks of job searchers in Germany. 

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