Adding to the Euro zone's debt woes; slow growth in "core" economies of Germany, France, and the Netherlands.
After sharp first quarter gains, the major economies of Europe stuttered to a near halt, raising fears that the debt problems experienced by several members will be exacerbated because of a lessened ability of lthe European Central Bank to keep them liquid.
Wall Street Journal:
The weakness stretched from Germany, Europe's industrial powerhouse, which slipped to near-stagnation from boom-like expansion in previous quarters, to fragile and debt-ridden countries like Portugal.
With risks of stagnation on the rise, the European Central Bank will likely pause its rate-increase campaign for many months, analysts say, or risk exacerbating Europe's economic troubles.
Euro-zone gross domestic product rose 0.7% at an annualized rate in the second quarter, according to data from the European Union's statistics agency Eurostat, half the rate economists expected. On a quarterly basis, GDP grew 0.2%. European stocks slid on signs of economic weakness, and the euro fell slightly versus the U.S. dollar.
Unlike previous quarters, when strength in the euro zone's prosperous "core" of Germany, France and the Netherlands more than offset stagnation and contraction in Southern Europe and Ireland, weakness was widespread in the second quarter.
Germany's economy advanced just 0.5% at an annualized rate. Though a downshift from the first quarter's sizzling 5.5% pace had been expected, the extent of the weakening caught forecasters by surprise. France was flat, while Spain grew less than 1%. Italy's 1% growth rate made it the best performer among large euro members. Portugal posted no growth in the second quarter from the first.
Greece and Ireland didn't report comparable quarterly figures, although last week Greece said its economy plunged 6.9% from the year-earlier period.
The key is the US economy. Our recovery will help Europe and their debt problems. But help won't be coming from us anytime soon if the forecasters are to be believed.