Germany’s exports hit by trade war, sentiment worsens on likelihood of ‘hard Brexit’ – ZEW

LONDON (ICIS)–Germany’s exports are starting to be negatively affected by the US-China trade war while a disorderly UK exit from the EU continues dampening confidence, the country’s ZEW research institute said on Tuesday.

Germany’s export-intensive manufacturing industry is the strongest within the eurozone, and the country’s exporters also showed a less optimistic outlook about the 19-country currency union going forward.

ZEW added that the fall in September was only comparable to the sharp decreased posted immediately after the UK referendum on EU membership in June 2016.

	October	September	Change
Germany economic sentiment	-24.7	-10.6	-14.1
Germany current situation	70.1	76	-5.9
Eurozone economic sentiment	-19.4	-7.2	-12.2
Eurozone current situation	32.0	31.7	0.3

Germany’s current value of minus 24.7 points is far below the long-term average of plus 22.8 points.

“Expectations for the German economy are dampening above all due to the intensifying trade dispute between the US and China. The resulting negative expectations on German exports are now beginning to show in the actual development of exports,” said Achim Wambach, ZEW’s president.

“A further negative influence on economic and export expectations is the danger of a ‘hard Brexit’, which is becoming ever more likely. Last but not least, the situation of the governing coalition in Berlin is perceived to have become more unstable, which also weighs on economic sentiment.”

Germany’s governing coalition woes increased on 14 October, when Chancellor Angela Merkel’s ally party in the southern state of Bavaria, the largest and most industrious in Germany, suffered heavy vote losses on regional elections.

Wider geopolitical tensions are also weighing down confidence in Europe, where stock markets suffered heavy losses last week.

As a sign of growing uneasiness among investors, Spain’s energy and petrochemicals major Cepsa said on 15 October it was putting on hold the partial initial public offering (IPO) it had announced less than a month ago.

Pictured: Container ship being loaded at Hamburg’s harbour
Source: Lutz Gerken/imageBROKER/REX/Shutterstock