Euro zone flash GDP was released today indicating economic growth in the 17-nation euro area slowed more than expected in the second quarter. The data follow Germany’s GDP data released earlier in the day which showed Germany’s economy, the largest in Europe, stagnated in Q2 amid the worsening sovereign- debt crisis.
Eurostat statistics agency reported that GDP in the euro zone rose 0.2% in the second quarter versus a 0.8% increase in the first quarter. Economists had predicted a 0.3% expansion.
Heavy fiscal tightening in some peripheral states, contributed to the slowdown as Italy and Spain are stepping up budget cuts, while external demand for Europe’s exports are also slowing as the whole global economy is slowing down.
A separate report today indicated that euro-zone exports dropped a seasonally adjusted 4.7% in June from May when they rose 1.5 %. Also, imports slumped 4.1 % and the trade deficit widened to 1.6 billion euros ($2.3 billion) from 800 million euros.