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Growth slows in Germany

Monday, August 15, 2011 - 02:09

Aug. 16 - Stagnant growth in Europe's powerhouse Germany knocks stocks and drives the euro lower on fears that the global economy is slowing more than expected. Hayley Platt reports.

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Europe's already fragile economy slowed in the second quarter dragged down by a sluggish performance by Germany. Growth for the 17-euro zone countries grew just 0.2 percent down from 0.8 percent in the first quarter. Germany is Europe's largest economy and growth there has been the one bright spot as economic clouds gather across the continent. However, German GDP growth missed expectations for the quarter - expanding just just 0.1 percent. That's its lowest rate of growth since the first quarter of 2009. Even Spain's debt-ridden economy grew faster at 0.2 percent Frankfurt trader Oliver Roth said the market had been caught by surprise. (SOUNDBITE) (English) OLIVER ROTH, FROM CLOSE BROTHERS SEYDLER AG, SAYING: "There were already a couple of investors very much concerned about the economic situation in the world but everybody was expecting that Germany will have a very good year. So we are really deeply surprised and concerned about the German GDP figures and that is what the market shows." The euro also fell, further adding to worries over the state of the global economy. Germany's Chancellor Angela Merkel and French President Nicholas Sarkozy are holding a meeting to discuss long-term solutions to the debt crisis. But while many believe a common eurobond would be the best way to deal with the region's debt, Roth says Germany is right to be skeptical. (SOUNDBITE) (English) OLIVER ROTH FROM CLOSE BROTHERS SEYDLER AG, SAYING: "I am totally against the euro bonds. There are some advantages on the short term track like lower interest rates for the southern states of Europe but there are a lot of disadvantages, for example that Germany has to pay much more interest rates sooner or later." The bonds in effect are IOUs issued to investors backed by the eurozone as a whole, rather than individual countries. And although Germany has long opposed the idea and says it will not be discussed in today's meeting, support is beginning to emerge. The head of Germany's leading export association says without the eurobond the world risks falling in to depression. Hayley Platt, Reuters.

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Growth slows in Germany

Monday, August 15, 2011 - 02:09