German growth slumps to 0.1pc in second quarter
GERMANY'S economic growth nearly ground to a halt in the second quarter -- a surprising downbeat sign for the global economy.
The quarterly growth, announced yesterday, of only 0.1pc was way below market expectations for a 0.5pc increase and follows similarly disappointing readings for France and the United States.
Until now, Germany's economy, Europe's biggest, had been growing strongly as its world-renowned companies tapped export markets all around the world, particularly in faster-growing emerging countries.
Its industrial prowess had cushioned it from a sovereign-debt crisis that is afflicting the 17 nations that use the euro.
Germany's state statistical agency said that lagging consumer spending and construction investment were largely behind the slowdown. in the April-June period.
"Let's face it, Q2 marks a turning point in the German business cycle," said Unicredit's chief German economist Andreas Rees.
"The period of exuberant growth is now behind us. Less dynamic momentum will be in the pipeline in coming quarters, given the slowdown of the global economy."
However, Rees said the up-and-down nature of quarterly figures meant a German rebound in the third quarter couldn't be ruled out.
He said German companies had large industrial order backlogs that would keep them busy and help output in coming months.
Analyst Gregor Eder at Allianz also noted that energy production showed an unusual 8pc drop in the quarter. While the figures do not break out nuclear power, the shutdown of eight nuclear plants after the Fukushima tsunami and nuclear disaster in Japan appears to be behind the drop.
"That had to be it," said Mr Eder. "We are strongly assuming that was the reason."
Eder said the economy would have grown 0.5pc as expected, if the energy slowdown and weaker construction investment following a very strong first quarter were discounted.
The second quarter figure was way down on the 1.3pc growth recorded in the first quarter, when the economy was boosted by strong exports of cars and industrial machinery. That figure itself was revised down from 1.5pc in earlier releases. (AP)