FRANKFURT • German business confidence slid for a second month in July as companies grew increasingly nervous about exports amid escalating trade tensions between Europe and the US.
The Ifo institute’s closely watched gauge dropped to 101.7 from 101.8 in June. That’s the lowest since March 2017.
The reading was above the median estimate by economists for a decline to 101.5.
The report comes hours before the European Union (EU) makes a last-ditch attempt to convince US President Donald Trump that import tariffs on cars will harm both economies.
EU Commission President Jean-Claude Juncker was due to meet Trump in Washington yesterday, after finance chiefs from the Group of 20 nations warned over the weekend that trade tensions are jeopardising global growth.
Germany’s economy is particularly exposed to the latest threat because of the size of its auto industry. An earlier introduction of levies on steel and aluminium by the US triggered counter measures by Europe and China.
German automaker Porsche said earlier this month it is monitoring the discussion about car tariffs “very closely” and must take it seriously. The US is the company’s second- biggest market after China but it doesn’t produce any vehicles there.
Trade tensions are likely to feature heavily in the European Central Bank’s policy meeting today. The Governing Council has announced its intention to end net asset purchases this year, but says that move is dependent on incoming economic data.
President Mario Draghi said this month that the euro-area economy is strong enough to weather a gradual withdrawal of stimulus. In Germany, the Bundesbank predicts growth gained momentum in the second quarter, with manufacturing and private consumption acting as important drivers of the upswing as risks surrounding the trade outlook increase.
Ifo’s measure of current conditions rose to 105.3 from a revised 105.2. A gauge of expectations fell to 98.2 from a revised 98.5.