Euro Zone GDP May Not Be Pretty

Complacency about the state of the euro zone’s economy could get a serious shaking Thursday, with the latest growth figures not expected to paint a pretty picture.

The gross domestic product figures for the second quarter of 2014, following on from a paltry 0.2 percent increase in the first three months of the year, are unlikely to banish the looming specter of deflation and economic stagnation. Between April and June, the single currency region’s economy is expected to grow by just 0.1 percent from the previous quarter – or 0.4 percent from the same time in 2013. By contrast, the U.S. announced last month that its economy grew 4 percent on an annual basis.

Most importantly, Germany, long the engine room of Europe, and the region’s largest economy, is expected to show faltering or even declining growth. This can partly be accounted for by an unusually strong first quarter, powered by unseasonably high construction figures. Still, German investors are increasingly sceptical about the country’s economic potential, according to the ZEW figures released on Tuesday.

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