German economic slowdown raises fresh eurozone fears

• German growth at 0.1% for last quarter • First quarter growth revised down to 1.3% • Full eurozone figures due later on Tuesday The German economy has come to a near-standstill in the last quarter as the global slowdown hit Europe’s biggest player. In the latest blow to the eurozone, Germany grew by just 0.1% between April and June. Economists had expected growth of 0.5% during the quarter. Germany’s Federal Statistics also revised down the growth in the first quarter of 2011, to 1.3% from its initial estimate of 1.5%. With France’s economy failing to grow during the quarter , Germany’s GDP data shows that the eurozone economy has worsened as its debt crisis entered a new, dangerous phase. The German slowdown was blamed on a fall in domestic consumption and construction work during the quarter. It is a blow to Angela Merkel as she prepares to meet France’s Nicolas Sarkozy to discuss the euro debt crisis . Spanish GDP grew by 0.2% during the quarter, down from 0.3% in the first three months of 2011. GDP data for the whole eurozone will be released later on Tuesday, and City analysts warned that the region could have stagnated, or even contracted. Carsten Brzeski of ING said that the data was a “growth normalisation” rather than a “disappointment” on its own, as Germany should still grow by at least 3% this year. He warned, though, that the German economic recovery is clearly slowing. “Looking ahead, the million-dollar question is whether a solid second quarter is the beginning of the end of the German Wirtschaftswunder [economic miracle] and whether recent market turmoil could push the economy back into recession,” said Brzeski. “While German politicians are currently racking their brains on the pros and cons of common eurobonds, the luxury of having an economy running at ‘wonder’ speed is fading away.” Stock markets across Europe fell in early trading, with the FTSE 100 dropping 43 points to 5307. The euro lost ground against the dollar, as traders reacted to the news that Europe’s core had reached near-stagnation. “Following on the back of weak GDP data announced by France this will further undermine any efforts to resolve the eurozone debt crisis,” said Max Johnson, a broker at forex specialist, Currency Solutions. But he added: “Looking around the global economy, at least there will be few, if any, cases of schadenfreude.” Europe Germany Europe European debt crisis Graeme Wearden guardian.co.uk

Posted by on August 16, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.