German economy contracts while French stagnates

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German GDP contracted for the first time since 2012, while French GDP remained stagnant, according to the latest data released by Eurostat, reflecting the challenges ahead for European recovery.

GDP across the Euro area remained stagnant for the second quarter of 2014, with the decline being most pronounced in Germany, where GDP sunk from 0.7% in Q1 to -0.2% in Q2.

The figures confirm the negative economic sentiment for the German economy as reflected in the latest  ZEW index this week, which reported a 18.5 point decline in economic expectations for Germany. The ZEW attributes this in part to the ongoing crisis in the Ukraine, which has caused a reduction in German exports.

Writing in Le Monde, Michel Sapin, French minister of Economy, Finance and Industry anticipated a weaker GDP growth and announced that the French government will revise its government deficit limit.

Notable exceptions to the negative figures include Spain, which reported 0.6% GDP growth and the Netherlands, which reported 0.5% GDP growth.

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