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German economy slips back into negative growth | German economy slips back into negative growth |
(about 1 hour later) | |
Germany's economy shrank during the April-to-June period of this year. | Germany's economy shrank during the April-to-June period of this year. |
A decline in exports dampened growth, according to official data, which comes amid concerns of a global slowdown. | A decline in exports dampened growth, according to official data, which comes amid concerns of a global slowdown. |
Gross domestic product (GDP) fell by 0.1% compared with the previous quarter, according to the Federal Statistics Office. | Gross domestic product (GDP) fell by 0.1% compared with the previous quarter, according to the Federal Statistics Office. |
That takes the annual growth rate down to 0.4%. Germany, Europe's largest economy, narrowly avoided a recession last year. | That takes the annual growth rate down to 0.4%. Germany, Europe's largest economy, narrowly avoided a recession last year. |
Early signs for the third quarter "look ominous", said Andrew Kenningham, chief Europe economist at Capital Economics. "Manufacturing business surveys for July were all gloomy. | Early signs for the third quarter "look ominous", said Andrew Kenningham, chief Europe economist at Capital Economics. "Manufacturing business surveys for July were all gloomy. |
"And while the services sector should continue to hold up better, there are some signs that the slump is spreading to the labour market." | "And while the services sector should continue to hold up better, there are some signs that the slump is spreading to the labour market." |
Trade war woes | |
While the overall figures were negative, household and government expenditure increased, as did investment outside the construction sector. | |
Construction itself fell after an unusually good first three months, boosted by a mild winter. | Construction itself fell after an unusually good first three months, boosted by a mild winter. |
"The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports," the statistics office said. | "The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports," the statistics office said. |
The US-China trade war and the UK's departure from the EU, especially if it happens without a deal, are among factors affecting global economic confidence. | |
Last month, the International Monetary Fund cut its growth forecasts for the global economy for this year and next, citing US-China tariffs, US car tariffs and no-deal Brexit. | |
China's own economic slowdown has weakened demand for foreign goods. It is an important market for Germany, since it buys plenty of luxury cars. | |
Only the much larger economies of the US and China export more goods than Germany. | |
The results may make authorities consider more monetary stimulus, said Neil Wilson, chief market analyst for Markets.com. | |
Meanwhile, the European Central Bank has hinted it could cut interest rates to tackle a slowdown in the eurozone economy. | |
The ECB said last month that a weak manufacturing sector and uncertainty over Brexit and trade threatened to derail growth. It forecast rates at current or lower levels until mid-2020. |