The shrank in the second quarter, dragged down by a slump in exports, data showed on Wednesday, as manufacturers in Europe's largest struggle against weaker foreign demand and trade disputes.

Gross domestic product (GDP) fell 0.1% quarter-on-quarter after a confirmed growth rate of 0.4% in the first three months of the year, the Federal Statistics Office said.

The preliminary reading for April-June was in line with a Reuters poll of analysts.

The annual growth rate slowed to 0.4% in the second quarter from 0.7% in the first, calendar-adjusted data showed. That beat the poll forecast of +0.1%.

"The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports," the statistics office said.

Positive contributions came from domestic demand as household consumption, government expenditure and gross fixed capital formation increased on the quarter, the office said.

Construction declined in the second quarter after the sector pushed up overall growth in the first three months due to an unusually mild winter, the data showed.

"For a year now, the has been only crawling forward," Unicredit analyst Andreas Rees said, adding there was hardly any improvement in sight for the second half of 2019 as there were many uncertainties for German exporters.

"Besides Brexit, this is above all the U.S.-Sino trade dispute and possible U.S. tariffs on European cars," Rees said.

Following release of the data, the yield on Germany's benchmark 10-year government bond dropped to a record low of -0.623%. </s> Germany's economy shrank in the second quarter as trade dragged down economic growth amid worries that the country could slip into a recession.

Europe's largest economy contracted 0.1% from the previous quarter, as foreign trade slowed down economic growth despite robust consumption at home, according to a first estimate published Wednesday by national statistics agency Destatis.

In annualized terms, gross domestic product grew 0.4%, the agency said.

Higher private and government consumption and higher investments contributed positively in the quarter, but trade and a decline in construction dragged down the economy as exports decreased stronger than imports, Destatis said.

"Trade conflicts, global uncertainty and the struggling automotive sector have finally brought the German economy down on its knee. In particular, increased uncertainty, rather than direct effects from the trade conflicts, have dented sentiment and hence economic activity," ING Chief Economist for Germany Carsten Brzeski said.

The economic data will increase pressure on Germany's government to act amid calls for a stimulus package, he said. </s> European Union statistics office Eurostat said gross domestic product (GDP) growth in the 19-country euro zone was 0.2% in the second quarter versus the previous quarter, a slowdown from 0.4% percent in the first three months of 2019.

The GDP flash estimates numbers, including year-on-year growth of 1.1% from the second quarter of 2019, were in line with economists' forecasts.

German GDP fell 0.1% quarter-on-quarter, Germany's Federal Statistics Office said earlier on Wednesday. The annual growth rate in Europe's largest economy slowed to 0.4% in the second quarter from 0.9% in the first.

A global slowdown has affected growth across western Europe, but Germany's traditionally export-reliant economy has been particularly vulnerable.

Industrial production in the euro zone area fell by 1.6% in June compared with the previous month, and by 2.6% from the same month in 2018. Economists had predicted less sharp drops in output of 1.4% month-on-month and 1.2% year-on-year.

Employment growth in the euro zone area slowed to 0.2% quarter-on-quarter from 0.4% in first quarter, and 1.1% year-on-year from 1.3% in first three months of 2019.

Although employment growth is on a downtrend across the euro zone area, unemployment in Germany is just above its record low of 4.9% and data on Wednesday showed France's jobless rate fell to 8.5% in the second quarter, its lowest since the end of 2008.

However, economists say the employment outlook for the euro zone's two largest economies is uncertain given their broader economic slowdowns and exposure to the impact of global trade disputes. </s> Germany's economy contracted by 0.1 percent in the second quarter of 2019, the country's statistics office said in a statement Wednesday.

It was the second time in a year Germany has reported a shrinkage in GDP in a quarterly review as the engine of the European Union starts to feel the effects of the United States-China trade war and tremors in the automobile industry.

"In the second quarter of 2019, the real (price-adjusted) gross domestic product in Germany decreased by 0.1% on the first quarter of 2019, after adjustment for seasonal and calendar variations," the government office said.

"The Federal Statistical Office (Destatis) also reports that Germany experienced a slight decline in economic performance."

"The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports."

The slump in the second quarter of the year comes after a 0.4 percent increase in the first.

Fears of a recession already reared their head when Germany closed out a flat year in 2018 marked by a 0.2 percent contraction in the economy in the third quarter.

Compared to the same quarter the previous year, the German economy was up 4 percent, Destatis said.

One of the driving factors behind the poor results is the ongoing trade tariff war between Beijing and Washington, the effects of which have rippled across the global economy.

According to data released in recent days, German industrial production fell 5.2 percent year-on-year, the largest decline in a decade, while exports dropped 8 percent, a three-year low.

Brexit has also added to the uncertainty, with the UK's new prime minister, Boris Johnson, harnessing a potential no-deal Brexit as an outcome while a general cooling in the eurozone also had its effect.

Germany's all-important motor industry, its main export, has also suffered a drop in demand, partly due to new emission standards put out by the European Union last year. EFE-EPA </s> BERLIN (dpa-AFX) - Germany's economy contracted in the second quarter on weak exports, data from Destatis showed Wednesday.



Gross domestic product shrank 0.1 percent sequentially in the second quarter, reversing the first quarter's 0.4 percent expansion. This was the first fall in three quarters and matched economists' expectations. 



After calendar adjustment, GDP gained 0.4 percent on year, but slower than the 0.9 percent growth registered in the first quarter. At the same time, the unadjusted GDP remained flat.



Data revealed that positive contribution to growth came mainly from domestic demand. Household final consumption expenditure increased, together with government final consumption expenditure. 



Investment increased from the first quarter but gross fixed capital formation in construction declined. 



The development of foreign trade dragged economic growth as exports logged a stronger quarter-on-quarter decline than imports.



Copyright RTT News/dpa-AFX </s> Italian Prime Minister Giuseppe Conte says he expects a "further contraction of gross domestic product" (AFP Photo/Iakovos HATZISTAVROU)

Rome (AFP) - Italy's Prime Minister Giuseppe Conte said Wednesday that the economy probably contracted in the fourth quarter, which if true would plunge the country into a recession.

The gross domestic product (GDP) data for the fourth quarter of 2018 is set to be released Thursday by the ISTAT national statistics office.

"I expect a further contraction of gross domestic product," Conte said at a business conference in Milan.

It would make it the second consecutive quarter of falling GDP -- after a drop of 0.1 percent in the third quarter -- and would tip Italy into recession.

"Analysts tell us we'll likely still suffer a bit at the start of this year," he said, pointing the finger at a slowdown in China and Germany which are hurting Italian exports.

"But all the elements are there to recover in the second half," he said.

A recession is likely to put pressure on the spending plans of Italy's populist government.

The coalition of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its big-spending budget in December to avoid being punished by the European Commission and financial markets.

A slowdown will make it even harder to follow through on expensive vote-winning measures both parties promised their bases. </s> Germany's gross domestic product grew 0.4% on year in 2Q. "German Economy Shrank by 0.1% in 2Q," at 0635 GMT, misstated that GDP grew 0.4% in annualized terms. It grew 0.4% on year, not in annualized terms. </s> Turkey has entered a recession, recording two consecutive quarters of falling economic growth, according to government figures released Monday, casting a blow for President Recep Tayyip Erdogan ahead of critical local elections at the end of the month.

Mr. Erdogan has led Turkey through 18 years of continuous growth — making it a leading emerging market — but much of the growth of the last few years has come through unrestrained borrowing. The lira also plunged in value in mid-2018, amid global investor concerns and a sharp fall in consumer demand.

The Turkish Statistical Institute announced that Turkey’s gross domestic product shrank by 2.4 percent in the fourth quarter of last year compared to the previous quarter, after season al adjustments. That fall followed a decline of 1.6 percent in the third quarter. A recession occurs, by some definitions, after two quarters of contraction.

The recession arrives in the midst of a global economic slowdown that has reduced demand for Turkish exports and raised the cost of credit for its businesses. Growth in the European Union, Turkey’s most important market, has slowed to a crawl while Italy is in recession and Germany close to one. </s> • Germany’s economy shrank 0.1% in the second quarter, driven by a decline in exports due to the US-China trade war.
• The slowdown is bad news given Germany is Europe’s largest economy and a key player in the eurozone.
• The contraction comes after the UK economy shrunk last week for the first time since 2012 due to Brexit fears, underlining how political uncertainty is weighing on Europe.

Germany’s economy shrank by 0.1% in the three months to June, signaling a recession could be looming.

The decline marks a sharp shift from the 0.4% growth it recorded in the first quarter of 2019, according to Statistisches Bundesamt, the Germany’s statistics office. Europe’s biggest economy grew the least in six years in the first quarter, according to the Financial Times.

Much of the decline was driven by a slump in exports, which have suffered from tempered demand due to the US and China’s trade war.

“The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports,” the Statistisches Bundesamt said.

Signs for the next quarter look “ominous,” Capital Economics said in an email. “Manufacturing business surveys for July were all gloomy, as was the ZEW survey for August.”

“While the services sector should continue to hold up better, there are some signs that the slump is spreading to the labour market,” the economic research firm added. “The bottom line is that the German economy is teetering on the edge of recession.”

Several of Europe’s economies are weathering growth slowdowns, many due to political uncertainty. Brexit fears fueled a 0.2% contraction in Britain’s economy last quarter – its first decline since 2012.

“Today’s disappointing GDP figure is set to raise alarm bells over Brexit dragging the UK economy deeper into the abyss,” Lukman Otunuga, a senior research analyst at FXTM, said at the time.
The Federal Statistical Office of Germany discloses that Germany's gross domestic product shrank by 0.1% in the second quarter.