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Euro zone GDP slows in second quarter as growth in Germany shrinks

Euro zone GDP slows in second quarter as growth in Germany shrinks
FILE PHOTO: Tobias Jakob, an employee of German manufacturer of industrial robots and automation solutions KUKA, poses for pictures at the company's training center in Augsburg, Germany, March 28, 2019. REUTERS/Andreas Gebert -
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Andreas Gebert(Reuters)
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BRUSSELS (Reuters) – The euro zone’s GDP barely grew in the second quarter of 2019, data showed on Wednesday, as economies across the bloc lost steam and the largest, Germany, contracted thanks to a global slowdown driven by trade conflicts and uncertainty over Brexit.

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.

(Reporting by John Chalmers; Editing by Andrew Cawthorne)

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