ez second flash q2 gdp review
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GROWTH HELD STEADY AFTER GERMAN CONTRACTION

- First Estimates Confirmed Despite Negative German Growth

 

Frankfurt, 14 August (LS NEWS) – The second estimates for Eurozone growth were unchanged after Germany reported a contraction in the second quarter following declines in exports and industrial output.

 

The EU statistics office Eurostat repeated its quarterly Eurozone GDP growth rate of 0.2pct announced last month, which was a decline from 0.4pct in the first quarter. The annual rate was confirmed at 1.1pct versus 1.2pct growth in the January-April period.

 

“We don’t see details for the EZ components in this report, but the separate country data hint that a slump in net exports, and a slowdown in German construction capex were the main hits,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

Germany Goes Negative


Europe’s largest economy contracted by 0.1pct in the period as expected, and annual non-adjusted growth was flat, the German federal statistics office said early Wednesday.

 

“The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports,” the office said.

 

A number of analysts had suggested that negative German growth in the second quarter could lead to a reduction in the latest estimates for Eurozone economic activity. The EU receives GDP data from Germany before the country releases the information to the public.

 

Flagging manufacturing in Europe has been a drag on economies, and Eurostat said Wednesday that Eurozone industrial production in June dropped -1.6pct on the month.


ECB’s Dovish Shift Rooted In EZ Weakness


Slowing economic and consumer price growth in the Eurozone have increased the likelihood the European Central Bank will cut rates in September and possibly introduce further monetary stimulus measures outlined last month.

 

Prior to the release of the first Eurozone growth estimate for the second quarter, ECB President Mario Draghi said the outlook for the Eurozone economy “is getting worse and worse,” adding that members of the bank’s governing council were unhappy with how inflation was developing in the single-currency area.

 

To counter the slowdown, the ECB announced a shift to an easing bias and said it was considering multiple options for increasing growth, including renewed quantitative easing.


Troubles For Europe’s Big Four


Quarterly growth data in May-June from the four major Eurozone economies tells the story: Along with the German contraction, French growth dropped to 0.2pct from 0.3pct, Italian output was flat versus a -0.1pct rate in the first quarter, and Spain reported a decline to 0.5pct from 0.7pct.

 

--- Eric Culp

Twitter: @EricCulpLS

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