BERLIN/PARIS (AP) – Germany’s economy contracted by 0.2 percent in the second quarter of 2014, losing momentum after a robust first quarter which was helped by the mild winter.
France’s economy also stagnated in the second quarter, leaving President Francois Hollande increasingly desperate to fulfill his two-year-old pledge to get the country growing again.
Germany’s Federal Statistics Office said the figure, which was adjusted for seasonal and calendar factors, reflected that imports grew faster than exports.
The office said that “the balance of exports and imports had a negative effect on the German economic development.”
Economists’ consensus forecast as of earlier this week was a 0.1 percent contraction.
New growth figures coming out later in the day are expected to show the crisis in Ukraine is weighing on the economy of the 18 countries that use the euro.
Meanwhile, French national statistics agency INSEE reported that the euro zone’s second-largest economy posted zero growth for the second straight quarter.
Finance Minister Michel Sapin immediately acknowledged that the goverment’s forecast of one percent growth this year was beyond reach. In an op-ed published on the website of French daily Le Monde, Sapin said: “This year GDP growth will be around 0.5 percent, and nothing currently allows us to expect growth much above one percent in 2015.”
France’s plight, he argued, was part of a broader economic malaise in Europe.
Sapin had previously stuck to the government’s forecast of one percent growth this year since he came into office in April.
The INSEE report showed investment and trade slumping, and consumer spending growing only because energy costs returned to normal levels after a mild autumn and winter.
France has little chance to achieve Hollande’s pledge to European partners to bring the country’s deficit down to three percent next year. It missed a targeted reduction in 2013 and looks set to miss again this year.
Hollande has offered tax cuts to businesses and announced tens of billions of euros in spending cuts in his bid to bring France’s public deficit within EU-agreed limits, with so far little to show for it.