While the U.S. economic output expanded at a 4 percent annualized rate during the second quarter of 2014, European growth evaporated, in part due to uncertainty created by Russian interference in Ukraine. The Eurozone’s gross regional product was unchanged during the second quarter, the first quarter in five that the Eurozone has failed to expand. According to CNNMoney, analysts were surprised by the extent of Europe’s slowdown, which was blamed in part on a loss of confidence among German firms due to the crisis in Ukraine.
For its part, France has cuts its forecast for growth this year in half, to just 0.5 percent after flatlining during the initial 6 months of 2014. While the French are less exposed to the Ukrainian crisis, investment there is being suppressed by a lack of meaningful economic reform. Italy, the region’s third largest economy, is already back in recession. There is a fear that the entire regional economy is heading for recession once again. Since June, western nations have imposed much tougher sanctions on Russia and Moscow has responded with a ban on food imports. To support European growth, the European Central Bank cuts its main interest rate to a record low earlier this summer.
