An exchange traded fund that invests in Germany was down 3.5% before the bell Tuesday after the country said its economy slowed in the second quarter.

Gross domestic product rose by only 0.1% in the quarter as first-quarter figures were revised lower. The surprisingly weak report from the Europe’s biggest economy shook global markets on Tuesday and stirred the region’s debt crisis.

The data revealed “a turning point in the German business cycle,” Andreas Rees, economist at Unicredit, told the Financial Times. “It is a regime shift. The period of exuberant growth is now behind us.”

Germany is the only European nation that is in a position to lend to neighboring economies in the Eurozone. The country has the richest and largest economy in the European Union.

The iShares MSCI Germany (NYSEArca: EWG) is down 5.3% year to date and was set for a large decline on Tuesday, based on premarket trading.

Investors will be eying the outcome of the meeting today between Angela Merkel, chancellor of Germany, and Nicolas Sarkozy, president of France. Critics claim Merkel has no sense of urgency to help calm the crisis in the European Union, reports Nicholas Kulish for The New York Times. [Germany ETF Falls as Focus Shifts After Vote]

“Germany is going to get killed if it takes over the debt of the rest of the eurozone, and if the euro goes than so do its exports and its banks are exposed,” said Avi Tiomkin, a New York advisor to hedge funds, on Forbes.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.