situation report

Aug 14, 2019 | 13:05 GMT

1 min read

Germany: Economy Contracts by 0.1 Percent in Second Quarter

What Happened: Germany's gross domestic product fell by 0.1 percent in the second quarter over the previous three months, the Financial Times reported Aug. 14. Meanwhile, German Chancellor Angela Merkel said she didn't see the need for a fiscal stimulus package, adding that her government would continue to pursue high levels of public investment and support domestic demand.

Why It Matters: Germany's dependence on exports has made its economic growth especially vulnerable to global trade tensions and uncertainty, particularly the ongoing U.S.-China trade war and Brexit. The growing risk of a recession in Germany will increase pressure on the government to introduce stimulus measures, such as additional spending and tax cuts.

Background: Eurozone and EU GDP grew by 0.2 percent in the second quarter, down from 0.4 percent for the eurozone and 0.5 percent for the European Union in the first quarter of the year. Eurozone inflation is also expected to fall to 1.1 percent in July, down from 1.3 percent in June.

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