Germany grows in second quarter while France flatlines

City A.M. Reporter
Germany posted modest economic growth in the second quarter of the year and France stagnated, official data showed today, suggesting the Eurozone as a whole contracted over the three months.

Europe's largest economy eked out growth of 0.3 per cent over the quarter, marginally beating forecasts, but it is unlikely to be able to defy gravity indefinitely unless decisive action is taken to tackle the currency bloc's debt crisis.

More up-to-date evidence from the third quarter has shown declines in German manufacturing orders, industrial output, imports and exports. Germany's forward-looking ZEW sentiment index will be published later today.

"Growth turned out to be pretty solid. But this could be the last positive piece of news out of Germany for some time," said Joerg Kraemer at Commerzbank. "The German economy could contract in the summer. It is fundamentally in good structural shape, but can't decouple from the recession in the Eurozone plus the global economy has also shifted down a gear."

For France, it was the third consecutive quarter of zero growth. The central bank has already said it expects a mild contraction in the third quarter.

The Eurozone as a whole is forecast to have contracted by 0.2 per cent in the second quarter, having flatlined in the first. Economists say worse is probably to come.