Investor Outlook for German Economy Falls Amid Industry Woes
Investor confidence in Germany’s economic outlook fell for a third month as persistent global trade tensions weigh on growth momentum.
The ZEW index measuring prospects for the next six months declined more than expected and is now close to the weakest level in seven years. A gauge for current conditions fell below zero for the first time since 2010, meaning more respondents predict the situation will get worse than better.
Germany has been mired in a manufacturing slump for more than a year, and most recent numbers don’t hint at a turnaround. The Bundesbank predicts the economy shrank in the second quarter, and another investor survey suggests the economy may slip into a recession.
Europe’s largest economy is deeply sensitive to waning global demand -- a trend reinforced after China, its most important trading partner, reported its slowest economic growth since 1992.
“The continued negative trend in incoming orders in the German industry is likely to have reinforced the financial market experts’ pessimistic sentiment,” said ZEW President Achim Wambach. An end to the issues hitting exporters is “currently not in sight,” he said.
BASF SE fired a warning shot about the weakening global economy last week. The world’s largest chemical company said slowing markets from cars to crops and the impact of the U.S.-China trade war threaten to cut profit by 30% this year.
A gauge for the euro-area outlook fell marginally, with the decline in Germany offset by a gain for Italy. European Central Bank officials will meet next week and are expected to signal they’re willing to do more to support the region’s economy, including through lower interest rates or fresh asset purchases.
©2019 Bloomberg L.P.