German economic sentiment tumbles to lowest level since 2011
Key poll shows financial experts most gloomy since eurozone debt crisis
Expectations for the German economy have slumped to their lowest level since the eurozone debt crisis eight years ago amid deepening concerns over the US-China trade dispute and the potential for a chaotic UK exit from the EU.
The Zew survey of financial market experts revealed on Tuesday that economic sentiment in August had dropped to minus 44.1, its lowest since December 2011 and much gloomier than estimates from analysts in a Reuters poll who had predicted it to be minus 28.5. The index had come in at minus 24.5 in July. The experts polled showed that current conditions for the month were minus 13.5, down from minus 6.5 in July and worse than the predicted minus 7.
Turmoil in the country’s carmaking industry, the US-China trade spat and the prospect of a messy no-deal Brexit at the end of October have taken their toll on the export-orientated economy.
The poll points to a “significant deterioration in the outlook for the German economy”, said Achim Wambach, president of Zew. “The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth. This will most likely put a further strain on the development of German exports and industrial production.”
Tuesday’s figures show the fifth consecutive monthly decline in the respected poll, while apart from April this year the indicator has shown negative figures since March 2018. The index has been below its long-term average of 21.8 points for three years since September 2015.
Quarterly gross domestic product figures, due on Wednesday, are expected by the Bundesbank and a Reuters poll of analysts to show that the German economy shrank 0.1 per cent in the three months to June. GDP in the first quarter had expanded 0.4 per cent while second-quarter eurozone growth came in at 0.2 per cent.
“The financial market experts’ sentiment concerning the economic development of the eurozone also experienced a significant drop, bringing the indicator to a current level of minus 43.6 points, 23.3 points lower than in the previous month,” the survey said on Tuesday. The indicator for the current economic situation in the eurozone fell 3.9 points to a level of minus 14.5 points in August.