German economy contracts unexpectedly in Q2 as trade, investment weigh

BERLIN Thu Aug 14, 2014 2:00am EDT

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BERLIN Aug 14 (Reuters) - The German economy suffered a surprise contraction in the second quarter, its first in more than a year, as foreign trade and investment, particularly in the construction sector, weighed on growth in Europe's largest economy.

The data, combined with weakness in other large countries like Italy, is likely to raise new doubts about the recovery in the euro zone, which is struggling to emerge from the deep financial crisis that nearly tore it apart.

Germany's Federal Statistics Office said the economy shrank by 0.2 percent between April and June. It had been forecast to stagnate, according to a Reuters poll.

It was a marked slowdown from the January-March period, when the economy grew strongly, in part due to mild winter weather. In a further blow, the Statistics Office revised down the first quarter growth figure to 0.7 percent, from a previously reported expansion of 0.8 percent.

Unadjusted data showed the economy grew by 0.8 percent on the year in the second quarter, missing the consensus forecast in a Reuters poll for it to expand by 1.5 percent. (Reporting by Michelle Martin; Editing by Noah Barkin)

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