The German government yesterday maintained its growth forecast for 2017, even as a monthly survey showed firms increasingly nervous about the future in the face of global uncertainty.
Europe’s largest economy should expand by 1.4% in 2017 after hitting 1.9% last year, the economy ministry in Berlin said in a statement.
“The German economy is in very good condition,” said Economy Minister Sigmar Gabriel, adding that “the effect of a lower number of working days” compared with 2016 would account for most of the fall in growth.
But he acknowledged that “despite the extremely good economic situation, many people are concerned” about their own and the country’s prospects. Earlier in the day, a survey from the Munich-based Ifo institute showed business confidence at its lowest level since September. The Ifo index stood at 109.8 points in January, a fall of 1.2 points after months trending upwards.
Analysts surveyed by Factset had predicted a slight increase to 111.3 points. “Companies expressed greater satisfaction with their current business situation, but are less optimistic about their six-month business outlook,” Ifo president Clemens Fuest said in a statement. “Germany is getting increasingly concerned about the possible impact from US President Trump’s suggested trade sanctions,” wrote analyst Carsten Brzeski of ING Diba bank.
The US dislodged France as Germany’s biggest export customer for the first time in many years in 2015, he noted. According to the federal statistics office Destatis, Germany sold €174bn ($187bn) of goods to the US in 2015, while importing around €60bn of American goods.
Combined with the threat to German exports from Britain’s decision to quit the EU, Brzeski said “the German economy will continue to be highly dependent on domestic demand” in the year ahead.
Trump claims that competition from foreign imports destroys jobs in the US, and this week ditched plans for a free trade area stretching across the Pacific Ocean. The new president also used an interview with British and German newspapers ahead of his inauguration to attack German carmaker BMW over its plans to open a new plant in Mexico.
German Economy Minister Sigmar Gabriel gives an economic outlook for 2017 in Berlin yesterday. Europe’s largest economy should expand by 1.4% in 2017 after hitting 1.9% last year, the economy ministry said in a statement.