German economy in the second quarter shrank 9.7% from the previous quarter, the largest decline in history, the German Federal Statistics Office said on Tuesday (August 25). The contraction is far more severe than during the financial crisis more than a decade ago and is the biggest decline since quarterly gross domestic product figures was introduced in 1970, according to the federal statistics office. The sharp decline in the German economy is related to the overall collapse of private consumption, business investment and exports during the peak of COVID-19. According to seasonally adjusted German GDP data, consumer spending fell by 10.9%, capital investment fell by 19.6% and exports fell by 20.3% on a quarterly basis in the second quarter. However, the data for the second quarter was better than the first reading. The initial value released earlier showed that the German economy shrank by 10.1% in the second quarter. It is bad news, but it is better than expected, and the market has made an optimistic interpretation of it. "Looking ahead, it does not take an expert to predict that the third quarter will be one of the best on record," said analysts at ING, “All activity indicators point to a continued pick-up in summer activity." Meanwhile, Germany's August IFO prosperity index was also slightly better than market expectations, at 92.6, and market expectations at 92.2. The Euro rebounded by more than 0.2% on the 25th on the back of "bad news not as bad as expected". German Finance Minister Jens Scholz also said the Germany’s economy growth was better than expected.