Germany remained in recession in the second quarter of the year, as the strong euro eroded demand for exports. German GDP shrank by 0.1pc in the second quarter from the first quarter, and was down 0.6pc year-on-year, according to estimates from the Federal Statistics Office. The second quarter drop is the third quarterly contraction in economic activity in succession, and means Germany remains in a recession - its second in the past two years. Europe's largest economy contracted by 0.2pc in the first quarter and posted "flat to negative" growth in the last three months of 2002.
The rise of the euro played a large factor in hindering growth in the quarter, according to the statistics office. "The decline in economic performance in the second quarter of 2003 on the previous quarter is characterised by a decrease of exports, which was markedly larger than that of imports, thus leading to a smaller export surplus," it said. The stronger euro also weighed on the Italian economy, which slipped into recession for the first time in more than a decade in the second quarter, according to figures last week. //www.fxcentre.com