The German economy is heading for strong growth in the third quarter

The German economy is well on track to show growth in the current third quarter and larger than in the previous quarter, as it is driven by lively domestic demand. This was stated on Friday by the German Ministry of Finance (MF), which recalled that in the previous three months of April-June, the gross domestic product (GDP) of the largest European economy increased by 1.5% quarter on quarter. The third wave of the new coronavirus pandemic and the associated blockade, which lasted longer than expected, caused Germany's GDP to decline by 2.1% quarter on quarter in the first three months of 2021. In its regularly updated monthly report, the Ministry of Finance noted that confidence surveys and other indicators, such as mileage on trucks, point to continued optimism in companies and high activity in the economy during the summer months. The reopening of the economy and the decline in COVID-19 cases at the beginning of the summer brought an increase in household spending, which was already reflected in a sharp increase in retail sales in May and June. The German economy was also supported later this year by higher tax revenues, although accumulated tax revenues for the period January-July were still 1.7% lower than in the same period of 2019, ie before the outbreak of the pandemic. This shows how big a gap the pandemic has made in Germany's public finances. Finance Minister Olaf Scholz received a green light from parliament to suspend the debt brake enshrined in the constitution. This has enabled Berlin to borrow a record € 240 billion in the markets this year and more than € 130 billion last year. Scholz, the Social Democrats' candidate for the post of German chancellor after Angela Merkel in the September elections, proposed suspending the debt brake in 2022 so that Germany could borrow another almost 100 billion euros.