Once-Thriving Heart Of The Eurozone Stagnates
MELISSA BLOCK, HOST:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel. Fighting in Ukraine, sanctions on Russia and unhealed wounds from the financial crisis. It's not a good mix for the global economy. A new report from the European Union says, growth there was stagnant during the second quarter of the year. And as NPR's Jim Zarroli reports, the numbers show the most important economy by far, Germany, took a hit.
JIM ZARROLI, BYLINE: Not long ago it was the peripheral countries of Europe - Greece, Spain, Portugal and Ireland - that were mired in the most economic pain. Today those countries are beginning to pull themselves off the floor. Spain for instance grew by six tenths of a percentage point last quarter which was down right robust by current standards. Ben May is an economist at Oxford Economics.
BEN MAY: It will probably be a while before we start to seeing wages pick up due to the high levels of unemployment that are still there but things are slowly getting better.
ZARROLI: In contrast, the big economies of the North - including France and Germany - are stagnant or even shrinking. To some extent Germany's troubles are weather related but the country also faces challenges with growth slowing in China, India and Latin America Germany's vaunted export machine is slowing down a bit. Jacob Kirkegaard is a senior fellow at the Peterson Institute for International Economics.
JACOB KIRKEGAARD: It once again reflects the interconnectedness today of the global economy. Certainly the interconnectedness of the European or the Euro-area economy.
ZARROLI: Now Germany has to worry about the impact of sanctions against Russia. It's not that Russia was such an important market for Germany, but the threat of a wider conflict in Ukraine isn't helping the business climate in Germany.
KIRKEGAARD: Just as German businesses were contemplating, you know, whether to build a new plant or invest they had an unfortunately good excuse to hold off for a little bit and wait and see.
ZARROLI: This latest slowdown comes down after several quarters of weak but positive growth in Europe. And European officials were hoping to see the kind of gradual rebound that has taken place in the United States. But so far at least the sparks haven't really caught fire. Again, Ben May.
MAY: So all of that doesn't really bode well for the recovery and then it suggests it'll be fairly labored and certainly not as strong as we've seen after the region is emerged from recession in the past.
ZARROLI: The European Central Bank has said it will increase asset purchases later this year as a way of stimulating the economy. But the weak second-quarter growth will put pressure on the Central Bank to step up its efforts and be a lot more aggressive than it's been before now. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.