Eurozone economy shrinks despite slim German growth

The eurozone’s economy shrank in the second quarter, having flatlined in the first and things would have been much worse but for a small amount of growth in Germany, the region’s largest economy.

As businesses and consumers cut spending, the European statistics agency said the entire 17 nation currency bloc contracted by 0.2 percent from the first quarter.

Germany was up 0.3 percent, the Netherlands rose 0.2 percent, France was unchanged, Spain’s GDP declined 0.4 percent, Italy’s was down 0.7 percent and Portugal’s fell 1.2 percent.

Germany faces a slowdown due to weak growth in its main export markets. That was reflected in the latest survey of German analysts and investors’ sentiment compiled by the think tank ZEW which fell for the fourth straight month.

Economists said the figures confirmed the region is in a recession phase.

One of the strongest illustrations of that is Portugal. Weighed down by sweeping austerity measures imposed in return for its 78 billion euro EU-IMF bailout, the recession deepened there while unemployment hit a record high at 15 percent of the working population in July.

More than a third of young Portuguese are without a job and the government expects the unemployment rate to peak at 16 percent next year.

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