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German economy slows down

  Tuesday 16th August 2011

The Eurozone suffered a serious blow as it was announced the German economy grew by just 0.1% in the last quarter, instead of the predicted 0.5% growth. This economic slowdown is thought to have been caused largely by a significant fall in domestic consumption, as well as stagnation in the construction industry.

Germany's main index DAX is based in Frankfurt.

Germany's main index DAX is based in Frankfurt. Colin2k photos

With France’s economy failing to grow in the same quarter, Eurozone-wide growth is now at a mere 0.2%.

The news that Germany’s growth is close to a standstill has prompted stock markets across Europe to react, with the German DAX declining as well as the FTSE 100 falling by 73 points to 5,277.

Some economists are remarking that this may be an unnecessary overreaction, considering that the growth figure for Germany in the first half combined to an adequate annualised rate of around 3%. Still, the chances of a speedy recovery in the coming quarter are looking slim, and once again Europe’s ability to drag itself out of the current economic crisis is in serious doubt.

In contrast to Germany and France’s disappointing figures, other European countries recorded significant growth. Belgium, Sweden, Finland and Estonia reported growth figures of between 0.7% and 1.8%, with Latvia ‘leading the way’ at an impressive 2.2%. It is worth noting that data for some other countries has not yet been released.

Sara Hajjar

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