Should the eurozone worry about Germany’s GDP drop?

There has been more bad news for the eurozone, after Germany experienced its first quarter-on-quarter fall since 2015.

According to Destatis, Germany’s statistics office, GDP contracted by 0.2% in the second quarter of the year as a weaker trade position and lower consumer spending weighed on the economy.

The Guardian says trade weakness “was partly down to temporary factors”, including disruption to car production before new and more rigorous emissions tests came into force in September, but economists warned there were also some worrying structural developments in Germany.

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Carsten Brzeski, the chief economist in Germany for the Dutch bank ING, said the worst economic performance since the beginning of 2013 was “another wake-up call for the eurozone’s largest economy” while Centre for European Economic Research (ZEW) said that investors did not expect the German economy to recover rapidly from the third-quarter weakness.

In addition to angst about the impact of US President Donald Trump's abrasive trade policy, “German firms are concerned about instability at home where Chancellor Angela Merkel's awkward 'grand coalition' has come close to collapsing twice”, says RTE.

The Irish broadcaster says the figures “have raised concerns that a near-decade-long expansion is faltering”, while their release come at a bad time for the eurozone.

The 19-nation economic bloc saw its gross domestic product (GDP) rise by 0.2% between July and September, according to Eurostat.

The growing trade war with the US, uncertainty over Brexit and a stand-off over Italy’s populist budget, saw the eurozone grow by 1.7% year on year, the slowest pace since the final three months of 2014.