Despite Germany’s stalwart growth, the euro zone’s economy stuttered in the second quarter.
According to Reuters.com, the region “contracted by 0.2% on the quarter.” Meanwhile, “Germany eked out growth of 0.3%, marginally beating forecasts, but its forward-looking ZEW sentiment index slid for a fourth month running, undercutting even the lowest estimate in a Reuters poll.”
Experts have expressed their concern for Germany’s economy, stating that although it is the largest in Europe today, it will likely suffer if the regional crisis does not improve.
“Growth turned out to be pretty solid,” said Commerzbank’s Joerg Kraemer, “but this could be the last positive piece of news out of Germany for some time. The German economy could contract in the summer. It is fundamentally in good structural shape, but can’t decouple from the recession in the euro zone, plus the global economy has also shifted down a gear.”
Still, the euro zone has managed to keep up some level of growth despite its debt crises and recession- laden members.
Aline Schuiling of ABN AMRO explained that the situation is not as bad as many have expected, but that the region is most definitely in a phase of recession.
“What we see is a vicious circle of budget cuts, high interest rates in the periphery and sovereign debt rising,” she said. “Policymakers are moving very slowly. There are limited prospects for growth in the euro zone. We expect another contraction in Q3.”
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