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Germany in PANIC: Business morale TUMBLES in latest blow for German economy

The Munich-based Ifo economic institute said its business climate index fell to 101.0, its lowest level in more than two years. Fears have been growing in recent months that Germany could be seeing a downturn in its economy boom, with the government this week slashing growth forecast for next year. Blame has pointed toward trade frictions, with Germany being particularly sensitive to movements in the United States-China trade war, as well as political uncertainty surrounding Britain leaving the European Union (EU) and the terms of Brexit. Ifo chief Clemens Fuest forecast Germany as being braced for a “lean festive season”.

He said: “Concern is growing among German businesses.

“Companies were less satisfied with their current business situation.

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“Their business expectations also continued to deteriorate.

“The German economy faces a lean festive season.”

Ifo economist Klaus Wohlrabe said the German economy was slowing but there was no recession in sight.

This week saw Economy Minister Peter Altmaier acknowledge a slowdown in growth in recent months as he predicted economic expansion of around 1.5 to 1.6 percent, below his previous forecast of 1.8 percent.

Mr Altmaier told members of Germany’s foreign press association in Berlin: “Growth somewhat slowed in the past months as it did in many other countries.

“For the year as a whole, we’ll have growth of around 1.5 percent to 1.6 percent.”

However, the government expects fortunes to reverse and the economic powerhouse to enter its 10th year of expansion in 2019, Mr Altmaier added.

In April, the German government had predicted economic growth of 2.3 percent for this year.

This forecast was downgraded in October to 1.8 percent.

Mr Altmaier added: “With concern, we see the trade conflict between the United States and China, and we hope that it will be solved.

“We also hope that the trade tensions between Europe and the US can also be solved.”

A slump in car production was noted as having dragged down levels of exports, caused by new pollution tests that were introduced back in September.

The new WLTP emissions testing regime was brought into effect after the Volkswagen ‘dieselgate’ scandal, which saw millions of diesel motors fitted with “defeat devices” which could identify when they were being emissions tested.

It is believed the slump in the German auto sector was down to some car models not having timely approval for a new registration, forcing manufacturers to throttle production.

Last month it was revealed that the German economy has shrunk for the first time in three years, having last declined in the first quarter of 2015.

Gross domestic product (GDP) contracted in the third quarter compared to the previous quarter by 0.2 percent, according to the Federal Statistical Office.

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