German company managers were at their most pessimistic about the economy since the end of 2014 in June, according to the country’s Ifo Institute think tank.
Meanwhile managers’ views of business prospects in the next half year fell for the third straight month, Ifo’s closely-watched business climate index showed today.
Ifo’s business climate index fell to 97.4 in June from 97.9 in May. It was dragged down by the business expectations index, which fell to 94.2 from 95.2 the previous month.
Consensus forecasts had expected the business climate index to fall to 97.3.
Clemens Fuest, president of the Ifo Institute, said: “The German economy is heading for the doldrums.”
Christina Iacovides, assistant economist at Capital Economics, said the weak index score “suggests that Germany’s industrial recession has dragged on in the second quarter”.
The German government predicts GDP will grow by just 0.5 per cent in 2019. In April 2018, growth for 2019 was expected to be 2.1 per cent.
Economy minister Peter Altmaier has said new car emissions tests and low water in the Rhine have caused industrial hold-ups and hurt German output. Trade conflicts have provided a difficult economic backdrop.
In June, both the manufacturing and service sectors said business conditions had worsened.
“Industrial companies’ pessimism grew, due primarily to shrinking order books,” said Fuest.
In trade, however, the business climate index rose. “Companies were more satisfied with their current situation. They were also more confident about the coming months,” Fuest said.
Iacovides said: “We expect the German economy to slow to little more than a crawl in the second quarter.”