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Last Updated: Tuesday, 14 August 2007, 14:49 GMT 15:49 UK
Leading EU nations see slowdown
EU and national flags
Germany's economy is expected to recover soon
Leading EU economies Germany and France saw a slowdown in the second quarter, with growth lower than forecast, according to official figures.

Both countries' economies grew by 0.3% in the three months to June.

While weaker trade in France indicated deeper problems, analysts said the German slump was seen as temporary and caused by a construction slowdown.

Separate figures showed growth for the 13-nation eurozone hit 0.3% in the quarter, also missing forecasts.

This figure was down from growth of 0.7% seen in the first three months of the year.

The 27-member EU saw growth of 0.5%, marking a drop from 0.7% in the previous quarter.

The data follows disappointing news last week from Italy, which said its economy had grown by just 0.1% in the second quarter, also below expectations.

Different outlooks

Germany and France had been expected to show growth of 0.4% and 0.5% respectively.

Analysts said Germany's slowdown stemmed from a correction in the building sector, which was countering an especially strong first quarter. They expect a recovery in coming months.

"As business and consumer sentiment remained at elevated levels recently, German GDP growth should accelerate again," said Unicredit economist Alexander Koch.

But the outlook for France has been less positive.

Economist Philippe Brossard of Euler Hermes said the overall picture was not looking good.

"The 2% growth that we are expecting for the entire year will be hard to achieve."

Business investment during the period was flat in France, after seeing a 1.4% climb in the three months to April.

"The figures today confirm that France is consuming without producing," said Sonia Pangusion, an economist at Global Insight.

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