BERLIN, Aug 21 - Germany's recession in the first half of the year was due mainly to a sharp drop in the exports that have been the lifeline for Europe's largest economy in the past two years, statistics office data showed on Thursday. In a breakdown of data first released last week, the Federal Statistics Office confirmed overall gross domestic product shrank at a quarterly rate of 0.1 percent in the three months to end June, adding to a 0.2 percent drop in the first quarter. The data showed higher public spending in the second quarter was not enough to offset a sharp drop in exports and showed exports in the first three months of the year also fell, whereas the statistics office had previously reported a rise.
"The data show that domestic demand is still very weak: net exports fell for the third time in a row and show that there is no stimulus from the global economy," said Thomas Hueck, an economist at HVB Group in Munich. "Germany is clearly having difficulty generating growth and the third quarter will also be difficult, especially due to the summer holidays," he added. Most analysts still expect Germany's economy to pick up this year following a raft of positive survey data from both Germany and the United States but the finance ministry on Wednesday pushed back its assessment of when a recovery might take hold. In its monthly report, the ministry said the government now expected a recovery to start only in the last quarter of the year, compared to earlier projections of a stronger second half.
"Further developments in the near term are likely to be marked by weak demand in industry," the report said. The Statistics Office data showed stock building by companies contributed positively to GDP in the second quarter, but private consumption stagnated despite reports from highstreet retailers of a pick up in sales.//