German growth slows in second quarter

Europe’s largest economy, Germany, has been growing at its fastest pace in 12 years, although the Finance Ministry said today that economic growth is experiencing a ‘distinct decline’ as the strength of the euro is damaging exports and oil prices are denting profits further.

The fact that the euro gained 8.6 percent against the dollar affected exports outside the euro zone.

Deputy finance minister, Jorg Asmussen, said in a report today that global economic conditions are affecting the country, as this is vindicated by the fact that demand for German products has declined both from the rest of the euro zone as well as domestically.

This has caused a reduction in industrial output and rising energy and food prices have further dented demand.

Inflation is likely to remain high as it reached 3.3 percent in June which is the highest level since December 1993.

Germany’s gross domestic product slowed between April and June and the benchmark DAX share index has dropped 23 percent this year. Although the reduction in economic activity has not affected the labour market as unemployment fell to the lowest level in almost 16 years in June, it still shows signs of strength which may help Germany to climb out of the spiral of depression.

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