Europe

Germany's economy expands less than expected in Q2

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An elderly woman wearing a face mask shops in a supermarket, after the federal state of North Rhine-Westphalia decided to make wearing protective masks obligatory in shops and public transportation to fight the spread of the coronavirus disease (COVID-19), in Bad Honnef near Bonn, Germany, April 27, 2020. REUTERS/Wolfgang Rattay/File Photo

BERLIN, July 30 (Reuters) - The German economy returned to growth in the second quarter but bounced back less strongly than expected amid supply chain bottlenecks thatare hitting industry, data showed on Friday.

Europe's largest economy grew by 1.5% quarter on quarter, compared with a revised contraction of 2.1% in the first quarter, and by 9.2% on the year, the Federal Statistics Office said. A Reuters poll had forecast increases of 2.0% and 9.6% respectively.

Compared with the fourth quarter of 2019, the last pre-pandemic period, gross domestic product (GDP) was still down 3.4%, the Statistics Office said.

"Growth is decent, but it could have been stronger if it wasn't for shortages of materials," VP Bank Group Chief Economist Thomas Gitzel said.

Supply chain worries and rising coronavirus infections have dampened the outlook for the economy. A survey showed on Monday that German business morale fell unexpectedly in July, the first decline since January. read more

After more than two months of steady decline, COVID-19 cases have been rising since early July, due mainly to the spread of the more infectious Delta variant.

Roughly 60% of Germany's 83 million people have had a first shot of a COVID-19 vaccine and just over half are fully vaccinated.

Reporting by Maria Sheahan, editing by Thomas Escritt and Caroline Copley

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