Ger­man firms see Brexit clouds ap­proach­ing

The Myanmar Times - - International Business -

GER­MANY is wak­ing up to the threat of Brexit and could see weaker growth in 2017, an­a­lysts said af­ter a key busi­ness con­fi­dence sur­vey showed a sharp de­cline.

The Ifo eco­nomic in­sti­tute’s closely watched in­dex fell to 106.2 in Au­gust from its July level of 108.3, reach­ing its low­est point since De­cem­ber 2014.

An­a­lysts sur­veyed by Fac­tset had been ex­pect­ing a slight rise to 108.5.

“The Ger­man econ­omy has fallen into a sum­mer slump,” Ifo pres­i­dent Cle­mens Fuest said in a state­ment, not­ing that all sec­tors sur­veyed ex­cept con­struc­tion had re­ported a drop in the in­dex, with a smaller de­cline in July, when Ger­man busi­ness sur­prised fore­cast­ers by ap­pear­ing to shrug off anx­i­ety over Bri­tain’s late-June vote to quit the EU.

The lat­est cor­rec­tion was all the more un­ex­pected af­ter an in­vestor sur­vey by the ZEW in­sti­tute in midAu­gust showed a re­cov­ery from the Brexit slump in con­fi­dence in July.

Ifo’s head­line fig­ure is pro­duced from two fig­ures rep­re­sent­ing com­pa­nies’ feel­ings on the cur­rent busi­ness en­vi­ron­ment and the out­look for the next six months.

The sub-in­dex mea­sur­ing cur­rent busi­ness fell to 112.8, two points below its July level.

Con­fi­dence in the fu­ture out­look also took a two-point blow, fall­ing to 100.1 from 102.1 in July.

Man­u­fac­tur­ers, re­tail­ers and whole­salers all re­ported fall­ing con­fi­dence in Au­gust.

Chem­i­cal and elec­tri­cal firms were among the gloomi­est in in­dus­try, Ifo chief Fuest said, while food and beverage firms were the least pos­i­tive among re­tail­ers.

But one bright spot was con­struc­tion, where firms had a more op­ti­mistic view of the com­ing months even as their view of cur­rent busi­ness clouded over.

“There is a risk that the Ifo will fall fur­ther,” said Stephen Brown of Cap­i­tal Eco­nomics. “While con­fi­dence is stronger than it was in Fe­bru­ary, it still points to a slow­down in Ger­man eco­nomic growth in 2017.”

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