Euro-area economic confidence slides on global risks


FRANKFURT • Euro-area economic confidence slid for a ninth month, the longest streak of declines since 2011, as protectionism and political uncertainty cast a cloud over the outlook.

The latest drop in sentiment coincided with Germany having its growth outlook slashed and the World Trade Organisation (WTO) downgrading its view of global trade.

The latter also warned that the US-China tariff spat is already hurting corporate investment.

Within Europe, there’s further reason for concern as investors await an update from Italy about its public finances. Italian bonds fell amid reports that government budget talks have been hit by a dispute, which could delay publication of long awaited fiscal targets.

With the triple whammy of global trade frictions, a possible hard Brexit and populist rhetoric by the Italian government, the European Central Bank has acknowledged that risks have increased. Globally, the expansion may be “hitting a plateau”, the OECD said this month, also citing trade in its latest update.

The WTO said yesterday that world merchandise trade growth will slow to 3.9% this year from 4.7% in 2017. That’s a much sharper slowdown than the one to 4.4% projected in April.

The European Commission’s sentiment index — covering both households and companies — is now at the lowest in more than a year. Manufacturers’ expectations decreased markedly in September, and consumers became more worried about their financial situation, job prospects and the broader economy.