Germany's Economy Faces Downturn Amid Trade Tensions
Germany's economy contracted by 0.1% in the second quarter due to decreased U.S. demand following heavy buying to pre-empt tariffs. Investment dropped, but consumption and government spending increased. A new U.S.-EU trade deal, with reduced tariffs, potentially mitigated a larger trade conflict.
Germany's economy shrank by 0.1% in the second quarter, as reported on Wednesday, signaling reduced U.S. demand. This decline follows a 0.4% growth in the first quarter when American buyers rushed purchases to dodge anticipated tariffs.
According to the national statistics office, investment in the German economy dropped during this period, although consumer spending and government expenditure experienced a rise compared to the previous three months.
In a new development, the United States and the European Union reached a trade agreement on Sunday, setting a 15% import tariff on most EU goods, averting a more severe trade conflict. The U.S. remains Germany's top trading partner, with bilateral trade totaling 253 billion euros in 2024.
(With inputs from agencies.)
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