The forecasts for the presence of German tourists in Maspalomas in the winter season of 2024 are of unparalleled arrivals and without touching prices. But originally there are problems. Is it cheaper for an unemployed German to come on holiday to the south of Gran Canaria than to pay for heating at home? The second estimate of German GDP growth in the second quarter of the year confirms that the economy contracted again, with a contraction of 0,1% quarter-on-quarter, compared to +0,2% quarter-on-quarter between January and March. On a year-on-year basis, GDP growth increased by 0,3%.
For the Canary Islands Tourism Minister, Jessica de León, "the 16 million tourists who arrived in the islands in 2023 are not insured, since we depend on what happens outside and on factors such as inflation, which affects the rate of savings or spending capacity.” For this reason, “every day, every hour, our people, our companies and our sector fight to fill those airline seats and have a leading tourist destination in the world and to cover them, and generate employment. and wealth, we must put the resident first. And the Government is working on that every day,” he points out.
While private consumption fell 0,2% quarter-on-quarter and investments plummeted more than 2% quarter-on-quarter, public consumption increased 1% quarter-on-quarter. Net exports were also a drag on growth. In fact, the performance of the German economy in the second quarter looks like a reversal of the first quarter's performance. The fact is that the German economy is learning the hard way what it means to be in the midst of cyclical headwinds and structural changes. It is stuck in stagnation.
The German economy had started the year with some optimism. GDP growth in the first quarter was a positive surprise and confidence indicators improved, giving rise to hopes that the pessimism of recent years was behind us and that discussions about whether Germany could whether or not he was the "sick man of Europe." However, the truth is that GDP growth in the first quarter was driven by mild winter weather and a downward revision to the fourth quarter GDP. So, it was not what we would call a healthy, sustainable growth story.
With disappointing growth in the second quarter and almost all confidence indicators pointing south, the German economy currently finds itself where it was a year ago: stuck in stagnation and the growth laggard of the entire eurozone.
However, we are still not willing to give up at least a little optimism for the second half of the year. The biggest rise in real wages in more than a decade could still open German consumers' wallets and only a small improvement in industrial orders is needed to achieve the long-awaited inventory cycle turnaround. True, hopes of a consumption-driven recovery in the second half of the year took another hit this morning with falling consumer confidence.
