German investor confidence sags over trade conflict, Brexit

German Chancellor Angela Merkel visits a car factory earlier this year

German Chancellor Angela Merkel visits a car factory earlier this year

German investor confidence hit its lowest ebb in nearly eight years in August, a survey by the ZEW institute showed today, sapped by trade and currency wars and the threat of a no-deal Brexit.

German Economy Minister Peter Altmaier and Markus Soeder, Prime Minister of Bavaria, pose at a R9200 mining excavator of "Liebherr" during the official opening tour of the "Bauma" Trade Fair for Construction Machinery, Building Material Machines, Mining Machines, Construction Vehicles and Construction Equipment in Munich, Germany, April 8, 2019.

The ZEW index, which reflects confidence in the next three to six months, reached a level of minus 44.1 against minus 24.5 a month earlier. This is according to figures from ZEW research institute. He cited the trade dispute between the USA and China. Economists polled by Reuters had expected a drop to -28.5.

The financial experts' judgements of the present situation also worsened, dropping 12.4 points for Germany, to -13.5, and 3.9 points for the eurozone, to -14.5. "The recent escalation of the trade dispute between the U.S. and China, the risk of currency devaluation and the increased likelihood of Brexit without an agreement put additional pressure on an already weak economic growth", explained Achim Wambach, the president of ZEW. "This will most likely put a further strain on the development of German exports and industrial production", commented Achim Wambach. Analysts had predicted a reading of -7.0. Trade tensions are eyed.

The provisional look at German Q2 GDP is released Wednesday and is expected to show the economy contracting on a q/q and a y/y basis.

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