German Economic Sentiment Lowest Since September 2012: ZEW

Marco Green
June 14, 2018

German investor confidence weakened in June as sluggish economic demand and fears over the new Italian government exacerbated global trade tensions to drive business outlook to its lowest ebb in almost six years, research group ZEW said on Tuesday. This was a steeper drop than the consensus forecast reading of minus 14.0, and the lowest since 2012.

The survey was conducted between May 28 and June 11, a period including last weekend's disastrous G7 summit that saw US President Donald Trump tear up a joint communique with other leaders of advanced Western economies, citing trade differences.

Mr Trump stunned U.S. allies at the G7 Summit in Canada at the weekend when he backed out of a joint communique agreed by world leaders - including German Chancellor Angela Merkel - that made clear the need for "free, fair and mutually beneficial trade", emphasising the importance of fighting protectionism.

The recent escalation in the trade dispute with the United States as well as fears over the new Italian government pursuing a policy which potentially destabilizes the financial markets have left their mark on the economic outlook for Germany.

Trump stunned US allies at the weekend when he backed out of a joint communique agreed by Group of Seven leaders in Canada that mentioned the need for "free, fair and mutually beneficial trade" and the importance of fighting protectionism.

The downbeat assessment comes after Italy, Germany's fifth largest trading partner, triggered doubts over its commitment to euro-area membership when its new populist government promised to implement spending plans that would break European Union rules.

"But note that its past relationship with GDP growth has been very weak and we would not draw any firm conclusions from a particular level".

ZEW's gauge of current conditions slipped to 80.6 from 87.4.

There was no discernable financial market reaction to Thursday's data.

Other reports by Click Lancashire

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