German business morale drops as ′boom is over′ | Business| Economy and finance news from a German perspective | DW | 25.06.2018
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German business morale drops as 'boom is over'

Business confidence among German managers dipped again in June, a forward-looking monthly barometer by the ifo think tank has shown. Current trade conflicts are not the only headache for executives.

German business confidence deteriorated in June, with a closely watched monthly index by the Munich-based ifo research institute shedding 0.5 points to end up at 101.8 points. The result was based on a poll of some 9,000 executives in Germany.

"The tailwind enjoyed by the German economy is calming down," ifo President Clemens Fuest said in a statement.

"The boom is over," added ifo expert Klaus Wohlrabe, arguing that the German economy "was normalizing again." Wohlrabe pointed to increasing trade tensions with the United States, and a general slow down of global trade.

Home-made trouble

"The number of dark clouds in the German economic sky has clearly increased," said ING Bank Chief Economist Carsten Brzeski. He mentioned higher oil prices and "very recently, turbulences in domestic politics" as factors weighing on the economy and the mood among German managers.

German companies are nervously following a showdown between Chancellor Angela Merkel and her interior minister, Horst Seehofer, over immigration.

If the rift is not resolved within a week, it could topple Merkel's coalition government after just a little over 100 days in office.

In light of a weak start to the new year, leading research institutes have already lowered their growth outlook for 2018, with ifo now expecting the German economy to expand by only 1.8 percent this year as a whole, down from its previous forecast of 2.1 percent.

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German economy facing headwinds in 2018

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