SANTIAGO DE COMPOSTELA Spain German Chancellor Angela Merkel said the crisis in Ukraine was taking its toll on Germany, Europe's largest economy, which suffered a surprise 0.2 percent contraction in the second quarter.
Merkel said an unusually mild winter, which brought forward the usual spring upturn, had played a role in the weak April-June reading but added that the Ukraine crisis was also hitting German growth.
"There are, however, some uncertainties - I don't want to conceal that - the whole Ukraine-Russia situation shows that we of course have a big interest in our international relations being constructive again," she said at a joint press conference with Spanish Prime Minister Mariano Rajoy.
"But I nonetheless expect that our overall annual growth rate will be good, if nothing dramatic happens."
The German government has forecast that the economy will grow by 1.8 percent this year.