Eurozone second-quarter growth slows

Germany leads bloc's slowdown, Eurostat data shows

Germany's Economy Minister Peter Altmaier

The eurozone’s GDP barely grew in the second quarter of 2019, data showed on Wednesday, as economies across the bloc lost steam and the largest, Germany, contracted thanks to a global slowdown driven by world trade conflicts and uncertainty over Brexit.

According to the latest Eurostat data, gross domestic product (GDP) growth in the 19-country Eurozone was 0.2% in the second quarter compared with the previous quarter, a slowdown from 0.4% percent growth in the first three months of the year. The numbers are following decline in the industrial production in the eurozone, which fell by 1.6% in June compared with the previous month, and by 2.6% from the same month in 2018. Economists had predicted less sharp drops in output of 1.4% month-on-month and 1.2% year-on-year.

Meanwhile, earlier on Wednesday, Germany’s Federal Statistics Office said that, on a calendar-adjusted basis, the annual growth rate in Europe’s largest economy slowed to 0.4% in the second quarter from 0.9% in the first. For 2019 overall, Berlin expects growth of just 0.5%.

In the meantime, gross domestic product (GDP) fell 0.1% quarter-on-quarter, in line with a Reuters poll of analysts, as several observers raised prospects of another contraction in the third quarter, and the industrial sector suggested the government should ditch its balanced budget and kick-start growth via fiscal stimulus.

“The bottom line is that the German economy is teetering on the edge of recession,” Andrew Kenningham from Capital Economics said, noting that exporters were facing an even bigger potential hit if a threatened no-deal exit from the EU by Britain actually materialized on 31 October.

“We are in a phase of economic weakness but not yet in recession. We can avoid that if we take the right measures,” Economy Minister Peter Altmaier however told Germany’s Bild newspaper.

A technical recession is normally defined as at least two quarters of contraction in a row.

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