Euro zone posts zero GDP growth
Economic recovery stalls after Germany contracts and France flatlines, with quick rebound unlikely due to Russia and Ukraine uncertainty
The euro-zone economy ground to a halt in the second quarter of the year, drained of vigour by surprisingly shrinking growth in Germany and stagnancy in France.
Zero growth reported by statistics agency Eurostat yesterday was an alarm bell for politicians and policymakers in the 18-nation economy, which is already bracing for the impact of tit-for-tat sanctions against Russia over Ukraine.
Germany, Europe's largest economy, contracted by 0.2 per cent on the quarter, with foreign trade and investment notable weak spots, the German Statistics Office said.
With so much uncertainty surrounding Russia and Ukraine, a quick rebound is unlikely.
"[The] figures show that the upturn remains too weak to withstand external shocks, meaning that GDP growth will probably remain stuck in stop-and-go mode," said Peter Vanden Houte, chief euro zone economist at ING.
France fared little better, flatlining for the second successive quarter. That forced the French government to confront reality, saying it would miss its budget deficit target again this year and cutting its 2014 forecast for 1 per cent growth in half.
Italy, the euro zone's third largest economy, slid back into recession for the third time since 2008 in the second quarter, shrinking by 0.2 per cent and pressuring Prime Minister Matteo Renzi to complete promised structural reforms.
