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Anti-Russian sanctions

Germany blames economic decline on Russia sanctions

The ministry’s monthly report obtained by Reuters shows that Europe's largest economy shrank by 0.2% between April and June after growing 0.7% in the first quarter

© EPA/Arno Burgi

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BERLIN, August 22. /ITAR-TASS/. Germany’s sudden second-quarter economic contraction was probably due to Russian sanctions and confidence eroded by the crisis in Ukraine, Reuters news agency quoted the finance ministry as saying on Friday.

The ministry’s monthly report obtained by Reuters shows that Europe's largest economy shrank by 0.2% between April and June after growing 0.7% in the first quarter thanks largely to an unusually mild winter that gave a boost to construction activity at the start of the year.

“The decline in gross domestic product (GDP) goes beyond the expected counter-effect to the very strong weather-related performance in the previous quarter,” the finance ministry said in its report, attributing this “to the effect of sanctions and negative effects on confidence due to the Ukraine crisis”.

Uncertainty over Ukraine was likely to have resulted in the dampening of industrial activity in the second quarter, it said, adding that “other geopolitical tensions” and “weaker economic development in the euro zone” had also contributed to the contraction.

“If the Ukraine crisis does not escalate further and no further serious stages of sanctions are imposed, it is to be expected that the current economic slowdown is only temporary,” the finance ministry said, noting that if this was the case, investment was likely to pick up as the year progressed.

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