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In the second quarter of this year, the economy of the EU grew more than expected, but economic activity decreased in Germany, the leading European economy. The Gross Domestic Product (GDP) of the EU increased by 0.3 percent in the second quarter in the 20 countries that use the euro, according to official data released today by the statistical agency Eurostat. Germany, on the other hand, experienced a 0.1 percent decrease in GDP. At the eurozone level, the growth followed a similar performance of 0.3 percent from the January-March quarter, which was the first significant increase.
America’s Economic Growth Outpaces Europe
While Europe is experiencing a stagnation with little to no growth in the past year, the American economy has seen a 0.7% increase in the second quarter compared to the first, or 2.8% annually. This growth is attributed to American consumers spending freely, as well as government spending on higher budget deficits and subsidies for business investments in renewable energy.
Consumers in Europe are struggling as they have never saved more than now, while governments are also limiting spending due to budget constraints.
German Economy Unexpectedly Contracts in Second Quarter of 2024
According to preliminary estimates, the German economy unexpectedly declined by 0.1 percent in the second quarter of 2024 compared to the first quarter of this year, as reported today by the German Federal Statistical Office (Destatis).
Market expectations were for a contrary trend, with a quarterly economic growth of 0.1 percent. This marks the fifth consecutive quarter in which Germany has not seen any economic growth.
The Institute for Economic Research attributes this decline to a combination of factors, including global economic uncertainty, trade tensions, and reduced government spending to lower budget deficits.
Business Sentiment in Germany Hits a Three-Month Low
The IFO Institute in Munich recently announced that business sentiment in Germany has decreased for the third consecutive month in July, with pessimism currently prevailing in all sectors, as reported by the media.
Companies were less satisfied with the current business situation, and pessimism regarding the development of business in the next six months is more pronounced. Sentiment dropped in trade, manufacturing, the service sector, and construction, in all the sectors observed.
