German gross domestic product stalled in the second quarter as geopolitical concerns weighed on industrial output and construction weakened after a weather-induced boom in the first three months of the year, the Bundesbank said Monday, according to marketwatch.com. The warning, contained in the central bank’s monthly bulletin, is an indication that the euro zone will struggle to improve on the first quarter’s meager growth rate. Germany accounts for about 30 percent of the bloc’s GDP. During the first quarter, euro zone GDP expanded just 0.8 percent at an annualized rate, or 0.2 percent on a quarterly basis, despite annualized growth of 3.3 percent in Germany. Excluding Europe’s largest economy, the euro zone economy will have contracted slightly in the first quarter.
“Considering that the service sector is likely continued to expand, the real, adjusted gross domestic product (in Germany) was likely unchanged from the first quarter,” the Bundesbank said. “Geopolitical tensions are reflected not only in weaker future indicator surveys, but also in ebbing demand for interim goods.” The German statistics agency is expected to release preliminary second quarter GDP data on August 14. The Bundesbank report didn’t provide an estimate for growth in the second half of the year.
Based on April and May figures, factory production and construction have each fallen compared with the first quarter. Yet there are some caveats that may have exaggerated this weakness. In addition, many German workers took bridge vacations after mid-week holidays during the second quarter, resulting in fewer days worked, the Bundesbank said.
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