Germany’s Downturn Highlights Europe’s Fragility

Germany probably underperformed Spain last quarter for the first time in more than five years as the euro-area recovery almost ground to a halt.

After leading the currency bloc out of its longest-ever recession last year, Europe’s largest economy contracted in the three months through June, according to a Bloomberg News survey. The downturn in the region’s powerhouse highlights the fragility of a revival that European Central Bank President Mario Draghi has described as modest and uneven.

The 18-nation euro area is struggling to boost growth and inflation (ECCPEMUY) even amid unprecedented ECB stimulus, with Draghi citing inadequate structural reforms as a key reason. While the German data is distorted by mild winter weather that front-loaded output earlier in the year, Bundesbank President Jens Weidmann has warned the country must also adjust or risk losing its role as a growth engine.

Bloomberg