BERLIN: The German investors confidence collapsed to its lowest value since September 2016 amid fears that the EU’s largest economy may suffer from a possible trade war. According to the latest study of the Center for European Economic Research in Mannheim (ZEW), the monthly index of investors’ expectations fell to 5.1 points from 17.8 points. The trend corresponds to the analysts’ expectations, but they predicted a much lower drop – to 13 points.
Chancellor Angela Merkel stepped up her efforts to prevent the outbreak of a trade war after the United States announced that it was imposing duties on imports of steel and aluminum and threatened to introduce higher levies on foreign cars.
Earlier, the German Economy Minister Peter Altmaier said that after meeting with state officials in Washington, it was more hopeful that a serious trade conflict could be avoided.
The German DAX index, which includes companies such as Siemens AG and Volkswagen AG, is likely to end March with decreases for a second consecutive month. At the same time, the Euro appreciated by almost 15% against the US dollar over the past year.
German securities were one of the worst hit when the US administration announced it would introduce a tariff for importing steel and aluminum. The customs duties will have little direct influence, but Germany will be at the forefront if a trade war has forced the US to impose a customs duty on car imports.
According to current data on industrial production, the exports and manufacturing orders, the growth of the German economy is slowing. And while the Bundesbank predicts the strong upward trend in the first quarter of the year, as companies execute their orders, the expectations are likely to drop significantly over the next three months.
