The EU economy barely grew in April-June, as earlier efforts to ship goods ahead of the introduction of new tariffs in the United States led to the opposite result, and production in Germany declined, the Associated Press reports
Photo: www.apnews.com
According to the EU statistical agency Eurostat, the gross domestic product of the 20 Eurozone countries increased sluggishly by 0.1 percent from the previous quarter. Compared to the same quarter last year, the growth was 1.4 percent.
“And prospects are mediocre for the coming months, given the 15 percent tariff, or import tax, imposed on European goods in the US under the announced EU-US trade deal. The higher tariff will burden European exports with higher costs to either be passed on to US consumers or swallowed in the form of lower profits,” the publication reads.
The news agency reported that the economy weakened following a stronger-than-anticipated 0.6 percent growth in Q1. This growth figure was inflated by companies attempting to boost sales before the implementation of extra tariffs announced by US President Donald Trump on April 2nd, which occurred two days after the first quarter ended.
“Output fell 0.1 percent in Germany and Italy, while growth of 0.3 percent in France was boosted by a rise in auto and aircraft inventories while domestic demand was otherwise stagnant. That left Spain as the only strong performer among the four largest Eurozone economies at 0.7 percent,” the news agency reported.
As noted in the article, Germany’s economy is still approximately at the same level as it was six years ago before the pandemic. Its export-driven sector is encountering several challenges, such as increasing competition from China, a lack of skilled labour, high energy prices, insufficient infrastructure investment, and ‘burdensome regulation and bureaucracy’.