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German economy shrinks 0.1% in Q2 as trade weighs on growth

The German economy contracted 0.1% in the second quarter, following 0.4% growth in the prior three-month period, according to provisional data from the country's Federal Statistical Office.

The seasonally and calendar-adjusted quarterly contraction was in line with the consensus estimate of economists polled by Econoday. Compared with the same period a year ago, real GDP stagnated in the second quarter and rose 0.4% on a calendar-adjusted basis.

The statistics office said consumption expenditure and capital formation stabilized economic activity, while foreign trade slowed down growth as exports registered a wider quarterly decline than imports.

"Looking ahead, the future path of the German economy highly depends on external events and government action," wrote Carsten Brzeski, chief economist for Germany at ING, in a note. The government will face increasing pressure to act on Germany's weakening economy, though any fiscal policy reaction "will be more complicated" than during the financial crisis, he added.