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German and French growth flopped in Q2 - and that's bad news for the eurozone

Aug 14, 2015, 11:54 IST

German Chancellor Angela Merkel and French President Francois Hollande attend the Petersberg Climate Dialogue conference in Berlin, Germany, May 19, 2015.REUTERS/Tobias Schwarz

German GDP disappointed slightly in the second quarter of the year, coming in with growth of 0.4% instead of the 0.5% analysts had expected, according to figures out on Friday.

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We already knew that German industry slumped in June, with a 1.4% decline in output from May.

The French figure, which came in completely flat, defied expectations for a 0.2% increase.

Those two countries combined make up a significant chunk of the eurozone's GDP - they're the two biggest economies in the bloc, with Germany taking the top spot by some distance.

These figures are going to make it difficult for the eurozone to grow at the 0.4% analysts expected without a dramatic over-performance from a number of smaller economies.

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If eurozone growth comes in at just 0.3%, it won't be any stronger than the figure we saw in Q4 last year, a quarter in which some analysts seriously thought that the bloc was going to fall into recession.

The euro took a bit of a dip after the figures came out, down to as low as 1.1141 against the dollar, but it's only down 0.05% for the session:

Europe has been growing more reliably in the last six months or so than it previously had, and fears of a triple-dip European recession have largely disappeared. Early in the year, the consumer recoveries built on a weaker euro and low oil prices seemed quite strong, but that really hasn't been reflected much in the GDP figures. An economy struggling to reach 0.4% growth is not particularly healthy.

The total figure for the eurozone comes out at 10 a.m. London time (5 a.m. ET).

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