German GDP Shrinking Signals Fading Euro-Area Powerhouse

Cracks are emerging in Germany’s once rock-solid economy as companies’ reluctance to invest bears out Mario Draghi’s warning that the euro-area recovery is in danger.

Gross domestic product in Europe’s largest economy shrank 0.2 percent in the second quarter, the Federal Statistics Office said today, confirming an Aug. 14 estimate. While part of the drop can be attributed to a mild winter that front-loaded output earlier in the year, the Bundesbank has cast doubt on a second-half rebound and suggested its forecasts may prove too optimistic.