German sentiment at six-year low
The mood among German investors has sunk to its lowest in nearly six years, a survey has shown, weighed down by a festering trade dispute with the United States and concerns about Italy's commitment to the eurozone.
The ZEW research institute's indicator fell to -16.1 this month from -8.2 in May, it said yesterday. It is the lowest level since September 2012.
World leaders and global economic institutions are warning that the protectionism espoused by US president Donald Trump - including punitive import tariffs on steel and aluminium - are casting a dark cloud over the world economy.
But as Europe's biggest exporter to the US - a trade relationship that keeps more than a million Germans in jobs - German Chancellor Angela Merkel is desperate to avoid a trade war with Washington.
"The latest escalation in the trade dispute with the United States, and fears about policies by the new Italian government that could destabilise the financial system, are leaving their mark on the outlook for Germany," ZEW president Professor Achim Wambach said.
Mr Trump stunned the United States' allies at the weekend when he backed out of a joint communique that had been agreed by G7 leaders in Canada that mentioned the need for "free, fair and mutually beneficial trade" and the importance of fighting protectionism.
The survey was taken in the two weeks running up to Monday, when concerns about Italy were more prominent than those about trade.
"On the face of it, the ZEW index suggests that German growth will decelerate sharply and that recession is a significant risk," Jennifer McKeown of Capital Economics wrote. (Reuters)